What is a Lowballed Claim? The Ultimate Guide

What is a Lowballed Claim? The Ultimate Guide

After a natural disaster hits, leaving your property in shambles, one of the first steps of getting everything back to normal is usually to reach out to your insurance company. Regardless of how prone the area is to extreme weather conditions, the majority of property owners choose to protect themselves with an insurance policy, in case something like this ever happens. While it might seem like your insurer is on your side, there is always the possibility of experiencing a lowballed claim if you are not careful.

The truth of the matter is that insurance companies are not looking out for your best interest. As a business, they need to pay as little as possible to maximize the profits on their end. Therefore, if you put your trust into their hands when it comes to your final settlement check, you could get the short end of the stick, and you won’t notice until it’s too late. 

How Do I Know If My Claim Has Been Lowballed?

A lowballed claim is essentially a settlement offer from the insurance company that is less than ideal. When a disaster strikes your property and belongings are damaged or destroyed, your policy is supposed to cover any necessary repairs or replacements. 

When you pay an insurance premium every month, you are expecting your insurance company to put all of the pieces back together so you can continue your life as it was. Unfortunately, this is rarely the case in reality. Instead, they will try to pay the absolute bare minimum to put a band-aid on the damages, if anything at all. 

Before going into the insurance claims process all on your own, it is important to be aware of some of the strategies that insurance companies use on property owners who are not familiar with the ins and outs of the business. This way, you will be able to avoid any potential schemes that they have in their back pocket to avoid paying you exactly what you deserve.

How Will Insurance Companies Try To Lowball Me?

Although insurance companies are generally regarded as helpful when you are paying them a monthly premium, you will learn that they have other motives when it comes time to pay you your settlement. Luckily, there are some age-old tactics used by these companies that are easy to catch on to when you know what you are talking about. Below are some of the proven strategies that your insurer might use to pay a lower amount than what is necessary to repair your life. 

Failure to Provide a Fair Assessment 

The first trick that insurance companies use to lowball property owners is failing to assess the entire scene. When your property suffers any kind of damage from fire, water, or other means of extreme weather, the insurance company’s adjuster is expected to walk through the premises and record everything wrong. From there, they will be able to come to a number that is sufficient for repairing all of the damages that the property has experienced. However, this process rarely works so seamlessly. 

Instead, the company adjuster will most likely try to walk through and leave out a lot of the damages. For instance, if your property was just wiped out by a hurricane and part of the roof came off with it, the insurance company might let you know that they can fix the exterior and patch up the ceiling inside as well. While this might sound ideal to the average property owner with no experience in insurance or contracting, the insurance company would be getting over on you in this instance. Without the professional opinion of a licensed contractor, there will be no way of knowing the extent of the actual damage. 

In actuality, you could accept the check from the insurance company and later find out that the inside of your walls has mold and mildew damage. Once the claim is closed, there will be no way for you to backtrack and try to get more money from your insurer. Insurance companies know this and will leave things out wherever they can if they are not immediately visible to the property owner. 

Waving a Check In Your Face

When insurance companies give lowball offers, they are trying to get the claim closed out as soon as possible and move on to the next one. As a result, these offers can frequently come with a bit of pressure, especially if they see an opportunity to be dishonest with an inexperienced property owner. 

The first step of this strategy is to offer you a number that is almost insulting, and even lower than the low offer they have in mind. When you refuse the amount or try to negotiate, the company adjuster might offer to have a professional come through and give you a more detailed quote. 

This professional is usually hired by the insurance company and has already agreed to give a specific number at the end of the walkthrough. Therefore, you will find that the contractor’s offer is much lower than the first one you received, making it look much more attractive than before. 

Thinking this is your only option, you might decide to go with the highest settlement it seems you will be able to receive. Insurance companies will take advantage of this and apply more pressure by letting you know that they will give you the money on the spot, essentially just waving the check in your face. 

As a property owner in a state of desperation, the insurance companies know that the check is very likely to be accepted in your time of need, which is exactly how they will be able to lowball your settlement. 

Leaving Out Damaged Areas 

The classic insurance company scams do not stop at the initial assessment phase. In addition to purposefully trying to leave out certain damages to avoid paying for them, they will not necessarily make sure that everything is restored to tip-top shape. 

As an example, think about a living room fireplace that gets wiped out by a natural disaster. The insurance company might offer to repair it completely, leaving out the cracks in the ceiling above it that were also a result of the original damage. 

How Can A Lowballed Claim Affect My Repairs?

Aside from the more obvious struggle of getting less money than you expected from your insurance company, a lowballed claim can affect your repair efforts in a big way. 

It’s hard enough to get your life back on track after a natural disaster as it is, but the usual insurance company gimmicks can make it a lot more difficult on you when it comes to repairs. Below are the bumps in the road that you can experience as a result. 

Complications With Contractors 

When insurance companies agree to pay for repairs, they will indicate what exactly is going to be done within your property. One of the tactics that they use to lowball property owners is to write up an unrealistic scope of work. 

In other words, they will try to describe a service that is not performed by the indicated professional who is expected to complete the task. As a result, you will be left to find someone else on your own who will agree to do the job as promised. 

This is something that insurance companies use to make their offer look attractive when it is very unrealistic. As the property owner, don’t fall for this common method that will leave you with the short end of the stick. 

As previously explained, insurance companies will regularly describe an unrealistic scope of work, leaving you to pick up the pieces behind them. Even further, if the indicated professional is not able to complete the full repair for any reason, it is safe to say that you will have trouble finding someone legitimate to take their place. 

By getting over on you with a lowball offer, the insurance company can force you to hire cheap labor that will fit into the budget they have given you. At this point, you will either have to deal with unqualified individuals who are not licensed or come out of your pocket to get what you need. 

Bare Minimum Repairs 

When the insurance company offers to do a complete repair on your property damages, you should be wary of how they will go forth with the process. While it is true that they can bring you a proposal that sounds attractive, it is more than likely that they will not do the best they can to get your property and life back to normal. 

For instance, if you experience chipping on one of the exterior walls of your property, the insurance company might include repainting of the outside. However, they will not go above and beyond to cover the entire house, making sure that the color even matches. Instead, they might complete one coat of paint on the damaged wall only and leave you with the obvious cosmetic differences. 

Additional Permit Costs 

When it comes to property damage claims and repairs, there are additional permit costs associated with the action of putting everything back together. When the insurance company gives you a settlement offer, they usually will not account for these extra expenses. 

At the point where the check has been cashed, and repairs have begun, you will be stuck to pay for these permits with your own money. Needless to say, this can add up over time, especially when you have not received everything you were entitled to from your insurance company. 

Hire a Public Adjuster For a Higher Settlement!

The majority of property owners that go through the claims process alone will experience a lowballed settlement with no way to get around it. This is mainly due to the fact that they are not knowledgeable on the ins and outs of the business, as well as what their policy covers. 

When you have no idea what your coverage is, as well as your general rights as a property owner, it is easier than ever for the insurance company to run circles around you, offering a lowballed claim check that is not sufficient for even half of the damages that you have been left with. 

Fortunately, there is an advantage that you can keep in your back pocket to avoid the headache all together: a public adjuster. Public adjusters are appointed to take care of the entire insurance claims process for you. 

Think of a public adjuster like a good attorney, they are always on your side, fighting for you to make sure that you get everything that you are entitled to. When you hire a public adjuster to handle this process for you, they will walk through your property and take an accurate inventory of your assets and any damages that have occurred to lessen the likelihood of being the recipient of a lowballed claim. 

Trust Your Large Loss Adjuster to Negotiate For a Higher Settlement!

Instead of relying on the insurance company to calculate a fair settlement offer, you can have someone in your corner who will make sure that everything goes smoothly. As the property owner, it is not expected for you to know exactly what is covered in your insurance policy, let alone the loopholes that insurance companies use to their advantage during the fight for a check. 

Your Large Loss Adjuster has over ten years of experience in the field. Our adjusters are property owners as well, people who know what it’s like to deal with insurance companies over property damage. We’re practiced in making sure that property owners get the largest possible settlement from their insurance companies. If you have property damage and loss as a result of a natural disaster or other incident and you’ve received a lowballed claim settlement by your insurance company, reach out today to find out how we can help you!

Related: What is the Difference Between Denied and Partially Denied Claims?

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