When Homeowners Insurance Won't Protect You

Surprised by holes in insurance coverage? Keeping records and fighting back can mean a happier ending.

Insurance can help pay for home damage caused by a fire.
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Check out the financial security of the insurer. While Barry says insurer insolvencies are rare, they do happen, particularly after big weather events that are extremely costly, such as the Joplin tornado. Check up on any financial news or reports on the stability of your insurer before committing to a policy. While states have funds designed to cover claims if insurers go under, consumers often find it harder to get claims paid if their insurer is bankrupt.

Keep detailed records. If you are filing an insurance claim, keep records (and take photos) of the damage, and make a note of any details about the claim and interactions with the insurer. If a claim is denied, ask for an explanation in writing. "If you do get into trouble later, you will have a record of what happened before," says Hunter. This will make it easier to follow up and lodge any complaints, if necessary. He also suggests complaining to a supervisor early in the process. "The higher you go, the more likely their bonuses are related to consumer satisfaction," says Hunter.

Get a second (and third) opinion. Aditi Haridat cautions that the first contractor recommended by the insurance company might not be the best one. She suggests getting competing bids, including bids from contractors not affiliated with the insurance company, before moving forward with any renovation.

Seek support. Experiencing major damage to one's home, whether it's from a fire or weather disaster, is traumatic. Haridat urges people to seek support from people who have had a similar experience through online forums and other networks. Sometimes, seeking out second opinions from legal advisors, public adjustors, or other professionals can also help, she adds.

Today, almost one year after the fire that destroyed their home, Haridat says her parents are close to reaching a settlement with the insurance company. They attribute their progress in part to the help of their public adjuster, who will receive up to 10 percent of the total settlement. The public adjuster suggested using an appraiser to estimate the damage, and doing so led to an offer from the insurance company that Haridat describes as "much closer to the number we were looking for." For now, she's happy that her parents can finally move on and start living in the home they worked so hard to buy.

Twitter: @alphaconsumer