In my previous blog, I discussed the importance of homeowners doing their homework before buying an insurance policy. This week, I am staying on the homework theme. Homeowners should know their rights for insurance claim repairs.

If a loss occurs, and after the homeowner reports the claim to the insurance company, the next step is to adjust the claim after coverage has been established. The adjustment of the claim for property damage involves figuring out the scope and cost of repair. Problems arise when the estimate prepared or relied upon by the insurance company does not accurately reflect the actual or complete scope and cost of repair. So, as a homeowner, what can you do if you think or know that the insurance estimate is insufficient?

In California, specific regulations govern the claim adjustment process. According to the California Code of Regulations,1 if an insured contends that the necessary repairs exceed the estimate prepared by or for the insurance company, the insurance company must do one of the following:

(1) pay the difference between its written estimate and a higher estimate obtained by the claimant; or,

(2) if requested by the claimant, promptly provide the claimant with the name of at least one repair individual or entity that will make the repairs for the amount of the written estimate. The insurer shall cause the damaged property to be restored to no less that its condition prior to the loss and which will allow for repairs in a manner which meets accepted trade standards for good and workmanlike construction at no additional cost to the claimant other than as stated in the policy or as otherwise allowed by these regulations; or,

(3) reasonably adjust any written estimates prepared by the repair individual or entity of the insured’s choice and provide a copy of the adjusted estimate to the claimant.

In my experience, the first two options above do not happen with great frequency. It would be nice if it were that easy. More often than not, if there is disagreement over the estimates, the insurance company will choose the third option. The key, however, is that the adjustment must be "reasonable." Most homeowners cannot readily determine if the insurance company is reasonably adjusting an estimate. Other than being more informed and asking questions, homeowners should not hesitate to seek assistance from insurance professionals when necessary.

1 California Code of Regulations, Title 10, Chap. 5, Section 2695.9 (d).