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Don't try this at home: Easy ways to mess up your home insurance claims

If your home ever is damaged in a fire or a natural disaster, filing a home insurance claim probably won't be an experience to which you'll look forward.

When you're already in a stressful situation, it's important to avoid making costly mistakes while dealing with your insurer. Here are eight goofs to avoid after you experience property damage.

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Don't be too quick to clean up

Your first impulse may be to start cleanup and repairs immediately.

home insurance claims mistakesClay Morrison, a property loss consultant with Morrison & Morrison in League City, Texas, observes that in the wake of a fire, tornado or hurricane, "people end up with a pile of water-soaked or burned junk and they're miserable. So their first instinct is to clean up."

The problem, however, is that an insurance adjuster needs to come out, inspect everything and take photos. If you clean up too much or haul away large amounts of debris and household items, you'll likely jeopardize your chance to prove the extent of the damage to your property.

Prevent further property damage

Even though you don't want to clean up too much after a loss, you shouldn't let the property languish before a claims adjuster surveys your damage. Depending on the type of incident and how many policyholders were impacted, that could take anywhere from a few days to as long as 60 days.

But don't sit and let rain pour in.

Following a loss, policyholders are required to mitigate or prevent further property damage. This requirement is found in the "conditions" section of insurance policies, notes Anita Taff of Taff Claim Services Inc. in Marietta, Ga.

Put a tarp over your home or board up the property if that is feasible. If you can't gain access to your residence because authorities won't allow it, obtain a letter from the fire department or another city agency documenting the fact. Show an insurer the letter to demonstrate that you took reasonable steps to protect your home.

Protect receipts and photos

One big mistake homeowners make is failing to take "before" and "after" photos of their properties. Each year, make a written inventory of your belongings, take photographs and make a video of all the contents in your home, suggests the National Association of Public Insurance Adjusters, a group of property-loss experts that works exclusively for property owners. Be sure to store these images in a safe place outside your home.

Also, never give an insurance adjuster original photos and receipts. Supply copies or duplicates and then request a written confirmation that your insurer received the documents. This way, you'll always have backup photos in case the insurer loses your paperwork or documentation.

Find a witness to the cause

Many frustrated homeowners have tried to get insurance claims processed on the strength of nothing more than their word. It might stand to reason that if your roof has been ripped off, the passing tornado caused it. But often the burden of proving the cause of damage still falls on the property owner.

Having a witness who can testify on your behalf can go a long way toward maximizing your insurance claims. "If a neighbor or someone who doesn't live in your home can tell an insurer, 'I saw a tornado hit that house,' that's going to be very important to the claims process," says Morrison.

Stick to the facts

Avoid exaggerating your damage. Even if you think your insurance premiums are too high or you felt mistreated by your insurer in the past, don't try to make up for it by padding your claim. Those actions are disasters in the making.

"I can't tell you the number of clients who say, 'You saved me from myself and I would've made a mess out of things because I'm not happy with the last claim my insurance company handled,'" says Taff.

"A good public adjuster will say, 'Our job is to get you every benefit and everything you're entitled to; but no more, and no less.'" Aside from being unethical, a false or padded claim can be denied and you could be canceled, she adds.

Don't let a contractor negotiate your insurance claim

Some policyholders allow contractors to negotiate homeowner insurance claims directly with insurers. This takes you out of the loop and leaves you with no clear idea about the exact repair costs or terms proposed by either side.

It is important to stay in charge of your claims process, says Ron Reitz a public claims adjuster and president of Quality Claims Management Corp., based in San Diego.

"Generally when you have a loss you need to hire emergency services to help with something," he says. "Whether it is removing flooding or drying out your property or bringing in temporary power, a lot of times these guys will have you sign a contract that gives them 100 percent of your insurance proceeds. They also will ask to negotiate your claim with the insurance company. Those are both big no-nos."

A better strategy: Do the negotiating yourself, or hire a public adjuster. Here's how to hire a public insurance adjuster after a disaster.

Don't sign a release on your insurance claim

Reitz warns that people whose homes have been damaged by flood, fire, or natural disasters may be too overwhelmed and distracted to pay close attention to documents they are asked to sign by their insurers. That's always a mistake. He advises you never to sign a release on your home insurance claim.

"Generally [the documents] say, 'You accept this as a final settlement and release us from any and all claims related to this loss,'" he says. "You are not required to sign a release as part of the claims process. They owe you the money. Let's just say you accepted $1,500 and you think [the damage] is minor. Then they start making repairs and say there is $8,000 in additional damages. If you signed a release, you just took away your right to go after the additional amount."

Be cautious when cashing insurance checks

Reitz also says you should be very careful about cashing insurance checks marked "full and final settlement." You don't want to cut yourself off from claims payments to which you're entitled.

In some states, such as California, it is illegal for an insurance company even to issue such a check, he notes.

Before you cash such a check, "send a letter to the insurance company," he says. "Say, 'I am not accepting this as the full and final payment but I am accepting it as the undisputed amount.' Let's say you have a $500,000 claim and they give you $50,000. You definitely want to use the $50,000 and then go back for the $450,000."

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