If you are a homeowner in Indiana, at some point your home will likely suffer property damage that is covered by your insurance policy. This could include storm damage to your roof, fire damage, broken pipes, or one of a dozen other covered events. This article provides an overview of the insurance claim process and answers some of the most frequently asked questions about insurance claims.

OVERVIEW OF CLAIM PROCESS

• Reporting the claim. You should report a property damage loss to your insurer as soon as you become aware of the damage to your home. You can report the loss to your insurance agent or directly to your insurer. You should report the loss in writing.
• Submitting sworn proof of loss. Most homeowner insurance policies require policyholders to submit a sworn proof of loss detailing the time of the loss, the cause of loss, and the total damage resulting from the loss. You should request a “proof of loss” form from your insurer so that you know exactly what details need to be included.
• Examination under oath. In some circumstances, an insurer requests that the policyholder appear for an examination under oath (EUO). An EUO is an interview where the policyholder is questioned under oath by a representative of the insurer. The interview is conducted in the presence of a court reporter. The insurer representative is usually a lawyer. Insurers use EUOs to collect additional facts about the claim, including facts or issues they can use to deny the claim. If an insurer requests an EUO, your insurance policy likely requires you to appear and answer questions. Failure to appear for an EUO could result in a denial of your claim. See Knowledge A-Z, Inc. v. Sentry Ins., 857 N.E.2d 411, 422 (Ind. Ct. App. 2006). You are entitled to have an attorney present during an EUO.
• The coverage decision. After the insurer investigates the claim, a claim adjuster will usually provide a written coverage decision. The letter should include an explanation of the coverage decision and cite specific policy provisions.
• Challenging the coverage decision. If you are unhappy with the coverage decision, you generally have three options: (1) informally resolve the dispute through negotiation; (2) invoke the appraisal provision; or (3) file a lawsuit.

FREQUENTLY ASKED QUESTIONS ABOUT HOMEOWNERS INSURANCE CLAIMS

What types of damage are covered by homeowners’ policies?

Homeowners policies typically provide first-party property coverage and third-party liability coverage. Under the property coverage, many policies cover physical damage to the dwelling and other structures as well as damage to personal property. Most policies also include “loss of use” coverage, which applies if you incur additional expenses if you are unable to occupy your home. This includes the cost of temporary housing and other living expenses while the home is being repaired or rebuilt.

Liability coverage provides coverage for bodily injury or property damage that the insured is legally obligated to pay even if the injury or damage occurs away from the home. For example, if an insured’s dog bites a third-party 100 miles from the home and that person sues for damages, the homeowner’s insurer must defend such claims unless the policy explicitly excludes coverage for injuries caused by animals.

How much time do you have to report the claim and file a lawsuit?

Most policies require the policyholder to notify the insurer of the loss “immediately” or “as soon as reasonably possible.” By statute, a policyholder has two years to file a lawsuit. Ind. Code § 27-1-13-17. It is important to read your policy though, as insurers often try to impose additional reporting requirements that they can try to use to deny your claim based on “late notice” arguments.

What is an appraisal? 

Most homeowner policies include an appraisal condition that states: “If we and you disagree on the value of the property or the amount of loss, either may make a written demand for an appraisal of the loss.” Once triggered, each side selects an impartial appraiser. The two appraisers then select an umpire. The two appraisers will then value the loss, and if they agree that determination becomes binding on the parties. An appraisal can resolve disputes as to both the value of the loss and the scope of the loss (i.e., whether certain parts of the property were damaged by a covered cause of loss). See, e.g., Villas at Winding Ridge v. State Farm Fire and Cas. Co., 942 F.3d 824, 830 (7th Cir. 2019); Mesco Mfg., LLC v. Motorists Mut. Ins. Co., 2023 U.S. Dist. LEXIS 12490 (S.D. Ind. Jan. 25, 2023).

What happens if an insurer refuses to comply with the appraisal provision?

You can file a lawsuit in the county where the home is located and ask the judge to compel the appraisal or enforce an umpire’s award. See, e.g., Philadelphia Indem. Ins. Co. v. WE Pebble Point, 44 F. Supp. 3d 813, 817 (S.D. Ind. 2014); Shifrin v. Liberty Mut. Ins., 991 F. Supp. 2d 1022, 1038 (S.D. Ind. 2014).

Can an umpire’s award be challenged or appealed? 

Yes, but only under limited circumstances. Under Indiana law, courts should set aside an appraisal award it is “manifestly unjust or is infected with fraud, collusion, misfeasance or the like.” Atlas Constr. Co. v. Indiana Ins. Co., 160 Ind. App. 33 (Ind. Ct. App. 1974); Phila. Indem. Ins. Co. v. WE Pebble Point, 2016 U.S. Dist. LEXIS 161215 (S.D. Ind. Jan. 28, 2016).

What is the role of a public adjuster?

Public adjusters are licensed insurance adjusters who help the insured document and present insurance claims to the insurance company. Public adjusters usually seek a contingency percentage (10-20%) of the insurance proceeds as their compensation. These adjusters are regulated by statute. Ind. Code § 27-1-27-1 et seq.

Can the policyholder recover attorney fees if the insurer refuses to pay or otherwise breaches the insurance policy? 

A policyholder usually is not able to recover their attorney fees for pursuing claims against their insurer except in two circumstances.

First, a policyholder may be able to recover attorney fees if they prove that the insurer breached its duty of good faith and fair dealing. See Erie Ins. Co. v. Hickman, 622 N.E.2d 515, 520 (Ind. 1993). This is a tort claim under which an insured can recover “all damages directly traceable to the wrong and arising without an intervening agency.” Id. These “damages” may include attorney fees and emotional damages, among others. Patel v. United Fire & Cas. Co., 80 F. Supp. 2d 948 (N.D. Ind. 2000); Mikel v. American Ambassador Cas. Co., 644 N.E.2d 168 (Ind. Ct. App. 1994).

Second, a policyholder may recover attorneys’ fees if they establish that the insurer has asserted a claim or defense that is frivolous, unreasonable, or groundless. Ind. Code § 34-52-1-1; Patel, 80 F. Supp. 2d at 961-63.

What is the difference between actual cash value and replacement cost value?

If your policy provides replacement cost coverage (many policies do), the insurer’s payment proposal will consist of two different amounts: the actual cash value (ACV) and the replacement cost value (RCV). ACV is the “actual” value of the property at the time of the loss given its age and condition. ACV thus takes depreciation into account. RCV is the amount required to replace the property without any deduction for depreciation. Replacement cost coverage is valuable because it reimburses the insured for the full cost of repairs, even if that places the insured in a better position than they were in before the loss. But RCV is only available to the insured if they repair the damaged property.

In a typical claim, the insurer will first issue a payment for the ACV amount, followed by a second payment once the repairs are completed. For example, if the insured’s 10-year-old roof was damaged by a storm and it costs $25,000 to replace, the insurer would first send a check for the ACV of the roof. Based on the age and condition of the roof, the insurer might calculate the ACV at $15,000. If the insured wants to recover the full RCV amount of $25,000, it must complete the repairs or replacement of the roof. Once the repairs are completed, the insurer will pay the remaining $10,000.

Should you accept the first payment offer from your insurance company?

You should consider the payment offer carefully. While some insurance claims are straightforward and the amount offered may be fair and reasonable, you should consider consulting with an attorney before accepting any payment. Your homeowners’ policy may provide additional coverage beyond what the insurance adjuster has offered. An experienced attorney can help you navigate the process.

This is not legal advice and is for educational use only.  Please consult with legal counsel should you have any questions regarding the information discussed above. Use and reliance on this article does not create an attorney-client relationship.

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