Even with typical homes, property insurance policies are complicated, multi-page documents. They include a lot of terms and conditions that insurance carriers expect policyholders to know and follow.
With respect to property insurance policies, Texans should be aware of the following provisions in that could be in their policies, as not knowing about them could lead to a surprise underpayment or denial of a property claim.
- Policyholders should read all the exclusions in their policies carefully. These exclusions spell out what an insurance carrier will not pay for. To give one common example, most insurance companies will add an exclusion that they do not pay for damage caused by floods.
- Austin residents should also familiarize themselves with their deductible, that is, the amount for which they are responsible before the insurance company pays for repairs or replacement of property. Sometimes, a different deductible may apply to damage from, say, a hurricane or a hailstorm as opposed to some other issue like a fire or theft. Also, deductibles may be a percentage of the property’s value instead of a flat dollar amount.
- It is also important to understand from the policy exactly how the insurance company will calculate payment and what a policyholder’s options are if they have a dispute. A person should never assume that the company is going to pay what it costs in today’s dollars to replace their property without reading the policy.
- Finally, Texans should make sure they understand all deadlines, reporting obligations and other conditions. Not following all the ground rules set out in the contract can give an insurance company a basis to deny a claim altogether.
Insurance carriers are not allowed to hide behind vague contract language
The first line of defense to a surprise underpayment is for a policyholder to know what their policy says. However, that is not the end of the story.
Although it is true that insurance policies are contracts, the insurers that draft these policies have some additional obligations, including an obligation to deal with their customers in good faith.
Also, insurers cannot enforce contract provisions that are not clear, as it is their responsibility to spell out precisely what they will and will not pay for. Usually, differences in opinion about what a policy means get resolved in favor of the customer.
Additionally, some companies’ policies may include provisions that are not enforceable under Texas law.
Texans who are struggling with their insurance companies over a property claim may have legal options, and they should make sure they understand these options before walking away from a claim.
