Loss or damage to a home and its contents can be catastrophic for persons and families. They can be displaced and without shelter, or have only partial use of their home, or have lost valuable property that they cannot replace. It is in these situations that homeowners count on insurance companies to fulfill their obligations to cover a loss.
Unfortunately, insurance companies not infrequently look for a way to avoid payment. After all, they make money by cashing your premium check and not by paying your claim! At the Law Offices of Eric Dinnocenzo, we have significant experience fighting on the side of New York and New Jersey homeowners against their insurance companies when a claim is denied.Proof of Loss
After a loss occurs, it is of critical significance that you timely submit a Proof of Loss to your insurance company. This is a simple form that your insurance company should provide to you. The Proof of Loss contains a simple description of the nature of the loss and the items that were lost or destroyed. Importantly, it must be submitted to the insurance company within 60 days (see N.Y. Insurance Law § 3407) or else you risk your claim being denied altogether.Claim Investigation
If the insurance company believes that the loss was suspicious or the result of fraud, it will conduct a claim investigation. These investigations are typically delegated to its Special Investigations Unit. The claims examiners who work in this unit tend to act as if they are private law enforcement for the insurance company, almost like they are police detectives investigating a crime, and they can act very aggressive in this role. Unfortunately, the courts do not supervise their behavior or place restraints on it. They will request substantial information from insureds such as documents relating to the home, activities, and finances. These requests are supposed to be limited to information that is relevant to the claim. However, they are often expansive and overreaching. Having an attorney on your side can help to protect your rights, but keep in mind that the law is favorable to insurance companies, and if you reject a request the insurance company will pursue a “failure to cooperate defense.”
This means that even if you have a valid claim, the insurance company can still legally deny it because you failed to cooperate with its investigation.
For instance, in an oft-cited New Jersey case, DiFrancisco v. Chubb Insurance Company, the appeals court denied a homeowner’s insurance claim after a burglary simply because he refused to turn over his business financial records. According to the court, the information was material and relevant to the claim investigation since fraud was suspected. The court held that “Plaintiff's refusal to produce the corporate books and records constitutes a material breach of the policy given the substantial suspicious circumstances existing in this case.” The court did not even reach whether there was a burglary and a valid loss.Examinations Under Oath
It is not uncommon during a claim investigation for an insurance company to request that the policyholder submit to an Examination Under Oath (referred to as an “EUO”). The insurance company frequently will hire a law firm that regularly works for insurance companies to conduct the EUO. The EUO is often conducted in the presence of a court reporter and a transcript of the examination is made. You have a right to request a copy of the transcript.
The lawyer has significant latitude, under the law, to ask questions at an EUO that cover a wide range of topics and may feel very invasive to the insured, including information about his or her personal life and finances. While it is advisable to be represented by your own attorney at an EUO, there is the risk that if you refuse to answer questions the insurance company can deny your claim for that reason alone. Again, this is referred to as the “failure to cooperate” defense. As you can see, insureds unfortunately do not have many rights during a claim investigation.Exclusions
Claims are often denied on the basis of policy exclusions. The scope of exclusions are too broad to list here, but examples are for intentional acts (i.e. arson), floods, and earth movement.
Insurance policies are extremely difficult to interpret – even for lawyers – and sometimes particular provisions must be interpreted by courts. Importantly, too, the insurance company has the burden of proof to show that an exclusion applies to deny coverage.
Our firm has significant experience fighting denials based on policy exclusions.Recovery
There are many different possible items of recovery under a homeowner policy.
Of course, you can recover for damage to your home and your personal property. Keep in mind the different payments for actual and replacement value.
Here is an easy example. If you have a television that you purchased for $500 and it is now 3-years-old, it may be worth only a percentage of that amount due to what is known as depreciation. In other words, it is no longer worth $500. If someone has $500 to spend on a television, they will not buy yours but instead will buy a new model. The insurance company may pay you that lower value for your lost television, which is referred to as the actual value.
If, however, you decide after the loss of your television to purchase a replacement, the insurance company will pay you the additional amount to buy a new television. If a new model of your television is, for example, still available at the store or online for $500 – or even for $550 or $600 or whatever the amount may be – the insurance company should pay you the difference so you can buy a new television.
You can also recover for additional living expenses incurred while you are unable to reside in your home. For example, if you are forced to live in a hotel, you can seek payment from the insurance company.The Punchline
Virtually all homeowners have homeowner insurance. This is because most homeowners have mortgages, and mortgage companies require their mortgagors to carry homeowner insurance. If damage occurs to a mortgaged home, the mortgage company does not want to be left with a property worth less than its investment.
Yet despite the ubiquity of homeowner insurance, it can be rather complex for people to navigate, and insurance companies will not hesitate to deny claims if they believe an insured has failed to satisfy his or her obligations. This is why it is helpful to have an attorney on your side during what is often a stressful and trying time.
If you need to consult with a New York or New Jersey homeowner insurance attorney, you can call the Law Offices of Eric Dinnocenzo at (212) 933-1675.