Depending on where you live and state law, an insurance company can take several weeks or several months to issue a payout after you file a home insurance or renters insurance claim.
In some places, state law requires insurers to pay in a "reasonable" amount of time, while other states give insurers between 10 and 30 days to acknowledge receipt of your claim and 40 days to accept or deny it. Unfortunately for renters and homeowners, there's no overarching federal law that stipulates a payout timeframe.
Experts also say that no two claims are equal. Even if two homeowners file a claim for roof damage, the circumstances surrounding each claim may greatly differ, leading to a lengthier claims process for one policyholder and a speedier claims process for the other.
The first step in getting your claim paid promptly is to make sure you are prepared before you need to file a claim, document damage and file the claim as soon as possible. See “How to file a home insurance claim.”
What can you do to expedite a homeowners and renters insurance claim?
John Huff, director of the Missouri Department of Insurance, Financial Institutions & Professional Registration, and president of the National Association of Insurance Commissioners (NAIC), says homeowners and renters can do several things to expedite their claim:
- Keep a home inventory of all of your personal belongings, including pictures and receipts if possible
- Report your claim promptly and make sure your insurer has current contact information for you.
- Know your rights, read your policy and comply with the reporting requirements stated in the policy. It's also prudent to know what's required according to state law.
- Document your loss. Take photos of the damage before any clean-up or repairs are done. Keep a record of conversations with insurance, repair, government and other professionals.
- Contact the state insurance department if you have concerns or complaints.
On the flip side, here are three things that can delay the claims process:
- Not having the proper paperwork
- Not maintaining a complete inventory of the affected possessions
- Not providing this information in a timely fashion to your insurance company
"Delays [with the claims process] can occur due to questions regarding the cause of loss, submittal of incorrect or incomplete information and delayed reporting to the insurer," says Huff.
How long does it take to get a decision and get paid?
The claims process can vary by state. Some state laws don't specify a specific timeframe for insurance payouts and only grant a "reasonable" amount of time to either deny or pay a claim. Here's the rundown for a few states:
Kansas: An insurance company must investigate your claim within 30 days once you've filed. If insurers need more time to investigate a claim, they must notify the policyholder every 45 days in writing of the investigation's status. However, there's no state law for when an insurer must pay a claim.
Missouri: "Missouri law states that insurers have 10 working days to acknowledge a claim and respond to all communication from the insured," Huff says. "Insurers have 15 working days to notify the insured of acceptance or denial of the claim after all forms have been submitted. Insurers may request more time, but they must provide a status update regarding the investigation within 45 days of the notice and every 45 days thereafter."
California: Insurers have 40 days to either accept or deny a claim. However, insurers can request additional time, but must notify the policyholder every 30 days about the status of their claim. Once insurers accept a claim and agree to a payout, payment must be issued no more than 30 days later. However, this stipulation does not apply when the policy "provides for a waiting period after acceptance of claim and before payment of benefits," state law says.
Texas: An insurer must acknowledge your claim within 15 days of receiving it. It then must accept or deny your claim within 15 days of receiving all necessary documentation. In some cases, insurers are allowed an additional 45 days to make a decision, but they must inform the policyholder of this in writing. An insurer has five days to issue payment once it has agreed to pay your claim.
For more information, check the website of your state's insurance department or call them for more information.
How to report your insurance company to the insurance commission
In most states, homeowners or renters undergo an appraisal process in which two appraisers -- one chosen by you and the other by your insurer -- and a neutral umpire come to a binding agreement to resolve your claim. Find details about this process in your policy.
You should receive notice in writing why your claim has been denied. The letter also should refer to the section in your policy that supports the insurance company's decision. If you think your claim has been wrongly denied, file an appeal with your insurer.
If the reason for the denial was insufficient proof of loss, get more documentation to bolster your claim. If you waited too long to file your claim and these time limits are clearly stated in your policy -- most insurance companies grant up to 90 days to file -- then you may not have grounds for an appeal.
Sometimes you may not agree with the amount your insurer is willing to pay, but if your policy is based on Actual Cash Value (ACV) rather than replacement cost coverage, the former of which takes depreciation into account, then you have to settle for less than you expect.
If you don't agree with your insurer's decision, hire a public adjuster to independently review your claim or file a complaint with your state's insurance department. Many states have a consumer hotline or online filing system for this purpose.
"To appeal a claim decision, you can send a letter to the insurance company with a detailed explanation as to why you believe your claim should be approved," Huff says. "Include documentation you've retained through the claim process, including statements from adjusters, correspondence with the company and property appraisals. Consumers also have the right to hire an attorney and bring an action against an insurer to enforce contractual rights."
Huff says most states have adopted the Unfair Trade Practices Model Act. NAIC has adopted the Unfair Claims Settlement Practices Act, which sets standards for investigating and carrying out claims. Both acts are designed to ensure fairness throughout the insurance process.
If you need to file a home or renters insurance claim, consult your policy and gather all the documentation you need to get your claim approved. If your claim is denied, use all the options at your disposal -- from the internal appraisal process to filing a complaint with your state insurance department or even suing your insurer -- to reach a final resolution.