When the insurer says no or pays too little

Bottom line first. If your insurer denies a hail claim or pays less than the repair costs, you have not run out of options. Ask for the decision and the estimate in writing, compare it line by line with your contractor's estimate, and send the insurer what is missing. If that fails, your policy may offer an appraisal process, you may hire a licensed public adjuster, and Colorado law forbids an insurer from unreasonably delaying or denying a covered claim. This lesson is general education, not legal or insurance advice. Your policy's own wording controls.

Step 1: get it in writing

A phone call is not a record. Ask the insurer to send you, in writing, the denial or the payment letter and the full estimate behind it. A denial is the insurer's decision not to pay all or part of a claim. An estimate is the insurer's itemized price for the repairs it agrees are covered. Keep every letter, email, photo and date in one folder.

Step 2: compare line by line

Put the insurer's estimate next to your roofer's estimate. Look for items that are missing (for example, flashing, vents, or one slope of the roof), different amounts of material, and lower prices per unit. Mark each gap. Many disagreements are simple omissions, not fights.

Step 3: ask for a supplemental payment

A supplemental claim asks the insurer to pay more because new costs or missed damage were found after the first estimate. Send your marked-up comparison, photos, and your contractor's written estimate, and ask the insurer to review it. Keep your request polite and specific.

Appraisal: the general idea

Many property policies include an appraisal clause. It is a way to settle a disagreement about the amount of a loss without a lawsuit: each side usually names an independent person to value the damage, and the two choose a neutral third person if they disagree. Whether your policy has this clause, how it works, how long you have, and who pays are all set by your policy's wording. Read it, and ask the insurer in writing how to start the process. The statutes gathered for this course do not set appraisal rules, so this lesson states none.

Public adjusters and their limits

A public adjuster is a person you hire to prepare and negotiate your claim with the insurer. They work for you, not for the insurer. Colorado sets these rules (C.R.S. 10-2-417):

• License required. No one may act or advertise as a public adjuster unless licensed. A business doing the work needs a license and must name a licensed public adjuster responsible for it.
• Bond. Before getting a license, an adjuster must carry a surety bond (a financial guarantee that can pay people harmed by the adjuster's errors) of at least $20,000.
• Fee cap after a catastrophic disaster. In the event of a catastrophic disaster, an adjuster may not charge or accept more than 10 percent of any insurance settlement or proceeds. The text used for this course gives no fee cap for other events, so outside that situation the written contract sets the fee. Ask whether your storm counts.
• No fee up front. An adjuster may not require or accept a fee, retainer or deposit before the claim is settled.
• Written contract. The contract must be in writing and state all terms. You may cancel by mailing a written notice to the insurer and the adjuster within 72 hours after signing a settlement representation agreement, and the adjuster must tell you about this right.
• No repair role. An adjuster may not take part in the repair of the property, may not send you to a repair firm in which they have a financial interest or from which they get a referral payment, and may not hold a contract or power of attorney that lets them choose who does the repairs.
• Your consent. They may not agree to a settlement without your knowledge and consent, and may not pose as the insurer's adjuster.
• No chasing during the storm. They may not solicit you while the loss-producing event is in progress.

Separately, a roofing contractor may not claim to be a public adjuster. A roofer with a valid contract with you may still discuss the scope of repairs with your insurer for you (C.R.S. 6-22-105(3)).

Your rights when a claim is delayed or denied

Colorado law says a person in the insurance business shall not unreasonably delay or deny payment of a claim for benefits owed to a first-party claimant (C.R.S. 10-3-1115(1)(a)). A first-party claimant is the person asserting a right to benefits owed to or for an insured under the policy, which usually means you, the policyholder. A delay or denial is unreasonable if the insurer had no reasonable basis for it (C.R.S. 10-3-1115(2)).

If that happens, a court action may be possible. The statute lets the claimant seek reasonable attorney fees, court costs and two times the covered benefit (C.R.S. 10-3-1116(1)). This is a general description only. Whether an insurer's decision was unreasonable depends on facts a court would decide, and filing deadlines can apply that are not in the sources used here. Ask a Colorado lawyer before relying on any of this.

Example with real numbers

Priya's insurer pays $12,000 on her roof. Her roofer's written estimate is $20,000, and a line-by-line check shows $8,000 of missing items. She asks for a supplemental payment and hires a licensed public adjuster. The written contract says the fee is 10 percent of the added money recovered, and the storm is treated as a catastrophic disaster, so the 10 percent ceiling applies. The insurer agrees to pay the $8,000.

1. Missing items: $20,000 - $12,000 = $8,000.
2. Highest fee under the cap: 10% x $8,000 = $800.
3. Money Priya keeps from the supplement: $8,000 - $800 = $7,200.
4. No money was due to the adjuster before the settlement. Taking a deposit up front would break the statute.

If the contract instead applied 10 percent to the whole $20,000 recovered, the fee could reach $2,000. Read how the contract defines the money it covers before you sign. All dollar figures here are made up.