Smoke damage insurance claims: How to avoid underpayment and denial

 

 

Blowing smoke

If you’re dealing with smoke damage from recent California wildfires, you may feel like your insurance company is giving you more excuses than solutions. Underpayments and denials are becoming common, with some insurers offering payouts that aren’t enough to cover how much smoke damage cleaning costs.

Here’s what you need to know to protect your home and your wallet.

 

Underpayment for smoke damage claims and denial trends in the news

State Farm’s limited cleaning coverage
State Farm has reached an agreement with ServPro to provide on-site cleaning for smoke-damaged contents at roughly $4 per square foot. Unfortunately, in many instances, this is insufficient for thorough cleaning and restoration. In some cases, contents require specialized treatment or off-site cleaning to ensure safety and eliminate odors.

CA Fair Plan’s limited coverage
The California Fair Plan is not covering the cleaning of contents in many cases and approving only minimal home cleaning. This leaves homeowners responsible for significant costs related to smoke damage restoration.

Unrealistic estimates
Many insurance companies have been significantly undervaluing the true cost of repairs. For example, one homeowner initially received a $42,000 payout estimate, while an independent assessment revealed actual remediation costs closer to $300,000.

 

Regulatory protections for homeowners

In response to growing concerns, the California Department of Insurance issued a bulletin reinforcing insurers’ responsibility to:

• Fully investigate smoke damage claims.
• Cover reasonable remediation costs, especially when hazardous substances like soot or ash are involved.
• Avoid pressuring homeowners into accepting low settlement offers.

California law clarifies that smoke damage can qualify as “direct physical loss or damage,” ensuring homeowners have grounds to push back if their claims are unfairly denied or underpaid.

 

Steps homeowners can take

If you believe your smoke damage claim has been undervalued or denied unfairly, consider these steps:

1. Hire a public insurance adjuster
   Public adjusters work on your behalf to assess the full scope of damage and negotiate with insurers for a fair payout.
2. File a complaint
   If you suspect your insurer is acting in bad faith, file a complaint with the California Department of Insurance.
3. Consider legal action
   For persistent claim denials or severely undervalued estimates, consult an attorney experienced in insurance disputes.

 

Protecting your health

Smoke damage often involves hazardous materials that can impact indoor air quality and overall home safety. Cutting corners on cleaning can leave lingering odors, soot residue, and long-term health risks. Don’t let your insurer push you into a solution that doesn’t fully restore your home.

 

10 costly smoke damage claim mistakes that lead to underpayment

When dealing with smoke damage, what you don’t do can be just as important as what you do. Avoid these missteps to protect your home, your health, and your wallet:

1. Underestimating the extent of damage: Many homeowners fail to recognize the full scope of smoke damage, leading to insufficient claims.
2. Inadequate documentation: Neglecting to thoroughly document the damage through photographs, videos, and detailed inventories can weaken your claim.
3. Delayed reporting: Failing to notify your insurance company promptly about the smoke damage may jeopardize your claim or lead to denial.
4. Premature repairs: Making repairs before the insurance company assesses the damage can complicate the claims process.
5. Misunderstanding policy coverage: Assuming full coverage without carefully reviewing policy details, exclusions, and limits.
6. Neglecting to track expenses: Failing to keep records of additional living expenses and repair costs can result in unreimbursed out-of-pocket expenses.
7. Self-cleanup attempts: Attempting to clean up smoke damage without professional help can worsen the situation and potentially harm your health.
8. Disposing of damaged items: Throwing away damaged belongings before the claim is settled can lead to loss of reimbursement.
9. Accepting lowball offers: Settling for initial, often undervalued, estimates from insurance adjusters without seeking professional assessments.
10. Overlooking long-term effects: Failing to consider potential long-term issues like lingering odors or structural problems in your claim.

 

The bottom line

Smoke damage claims can be tricky, and missteps can leave you paying out of pocket for repairs you should have been covered for.

For assistance in navigating complex insurance claims, a qualified public insurance adjuster can help ensure your property is restored properly without you shouldering unexpected costs.

If you’re struggling with a smoke damage claim, taking action now can help secure the recovery funds you need to rebuild safely.