"Can You Sue Your Homeowners Insurance Company if It Doesn't Repair Your Home Properly?

Typical homeowners' insurance coverage covers damage caused by fire, theft, vandalism, and storms. Floods and earthquakes are typically excluded from homeowner's insurance policies, but they may be covered under supplemental policies. Numerous policies include coverage for incidental charges, including the cost of temporary accommodation while your home is being repaired. Whether or not you can file a lawsuit if you are unhappy with the resolution of a claim depends on the nature of the issue and the terms of your policy.

Arbitration Clauses

The arbitration clause in your homeowner's insurance policy trumps the merits of individual claims. Although almost half of the states permit these clauses, not all homeowner's insurance contracts include them. If your policy contains an arbitration clause, you virtually never have the right to sue your insurance provider. You must instead submit to an arbitration process in which you forfeit many of your typical legal rights. A 2009 research by the Center for Responsible Lending found that customers triumphed in arbitration disputes only 4% of the time. One of the reasons for the imbalance, according to the report, is those arbitrators who ruled against customers more frequently gained popularity in the sector and received many more cases in the future.

Inadequate Compensation

The majority of insurance disputes involve coverage and settlement amounts, regardless of the quality of the repairs. If your insurance company asserts that your claim is not covered and you are unable to reach a compromise, pursuing a lawsuit may be your only option. When the settlement amount is contested, it is typically more cost-effective to reach a deal with the firm than to file litigation. The settlement may be less than what you believe you deserve, but unless the damages are substantial, you are likely better off settling than litigating.

Bad Repairs

In most cases, your insurance carrier is not liable for substandard repairs. You and the claims adjuster are primarily involved in the claims process. Typically, negotiations conclude with both parties agreeing on a settlement figure. You are then responsible for choosing qualified contractors to complete the necessary repairs. If they are deficient, you have a dispute with the contractor or whoever performed the repairs.

Complications

In certain situations, the settlement and repair process may expose the insurance carrier to potential liability. A house that has lost its roof due to a storm, for instance, may require initial emergency repairs or suffer more damage. The insurance company may incur liability if it refuses to pay for these repairs until you accept its overall settlement offer. If you did not have enough money in your settlement to adequately restore your home, a court might void the original settlement agreement because you signed it under duress and hold the firm liable for the expense of properly repairing your home. Consult a real estate attorney for assistance with such sophisticated insurance issues.