Was your homeowners insurance claim denied? Here's what to do next

Homeowners insurance can cover the cost of repairs if something goes wrong, whether it's a burst pipe or a devastating fire.

You'll need to file an insurance claim if you want to get compensated. On average, 6% of insured homes have a claim filed every year, according to analytics company ISO.

But what happens if your claim is denied?

Carriers can reject a claim for various reasons, from insufficient documentation to damage not covered by your policy. Understanding why a claim was denied and your rights as a consumer are essential if you want to appeal.

There are several reasons an insurance company might deny your claim, according to the Insurance Information Institute.

No policy in force

Not paying your premiums can lead an insurance company to cancel your policy and reject your claims.

The insurer needs to give you fair warning it's ending your policy, though the number of days varies by state.

Not a covered peril

Homeowners insurance covers many situations, from fires to fallen trees, but it doesn't cover everything you could face. Flooding is seldom included in standard policies, for example, and requires a separate flood insurance policy.

Neptune Flood Insurance is backed by Lloyd's of London and offers features other insurers don't, like living expenses if you have to relocate while your home is repaired, pool refill and repair and up to $10,000 in coverage for belongings stored in your basement.

CNBC Select's top flood insurance provider, Neptune also has high coverage limits: up to $4 million for your home and $500,000 for personal belongings.

Available in 48 states, Aon Edge has an excess flood policy with a $5 million building and contents coverage limit. The application process is streamlined with only 12 underwriting questions and no photos or elevation certificate required.

Other common policy exclusions include:

• Earthquakes and landslides
• Normal wear and tear
• Neglect (including mold, rot, rust and preventable damage)
• Termite, insect or rodent damage
• Damage from war, terrorism or civil unrest
• Intentional damage by the owner

Missed filing deadline

Though the exact deadline varies, most policies require you to submit a claim within a year of the damage, according to the III. If you wait too long, your claim likely won't be approved.

Insufficient documentation

Filing a claim requires photos, videos, receipts and other evidence of your loss. Without enough proof, your insurer may reject the claim.

Unapproved repairs

Preventing further damage after an incident is fine. Major repairs before your claim has been approved, though, should be avoided. Let the insurance adjuster assess the situation first.

Fraud

A claim that an insurance company deems fraudulent won't be covered and can lead to the cancelation of your policy. Intentional property damage or misrepresenting, exaggerating or omitting facts can all be considered fraud.

If your claim has been turned down, there are steps you can take to get satisfaction.

Review your policy thoroughly

Even before you have a claim, you should read your policy carefully to understand what's covered, how much money you're entitled to and how to file a claim.

If the damage is related to an excluded peril, you may need to tap your emergency fund for repairs. In the case of a natural disaster, you may be able to get assistance from the Federal Emergency Management Agency.

Contact your insurance company

Your insurer should send an explanation detailing why your claim was denied. If you believe the damage should be covered, reach out to your adjuster about reevaluating their decision or even making a home visit.

Gather documentation to make your case, including photos and receipts. Keep thorough records of all communication, including what information you sent and when you spoke. Communicating through e-mail can help establish a paper trail.

Erie Home Insurance ranked number one in J.D. Power's 2023 survey of property claims satisfaction and offers generous discounts for having multiple policies, installing home safety devices and for getting a quote up to two months before your current policy renewal date.

Erie is only available in 12 states and Washington, D.C. however, and you can't get an online rate quote.

Amica also earns praise for claims satisfaction and is available everywhere but Hawaii and Alaska. Its Platinum Choice plan includes replacement costs of up to 130% and extended coverage for jewelry and other valuables.

Amica also pays dividends in most states, with returns of up to 20% of your premiums annually.

File an appeal

If you believe your claim was wrongly rejected, the appeal process should be outlined in your policy. There is typically a time limit, so act quickly and include as much information as possible.

Hire a public adjuster

An independent agent hired by the policyholder, rather than the insurance company, a public adjuster can decipher your policy and navigate the claims process, making sure your side is fairly represented.

An adjuster can cost up to 15% of your potential payout, according to the advocacy group United Policyholders, so you'll need to decide if it's worth the investment.

Start your search with the National Association of Public Insurance Adjusters, which has a database of adjusters across the U.S. You can also check with your state's insurance regulator.

Be sure the adjuster you hire is reputable by asking for references. You can also check their license, though several states don't regulate or license public adjusters.

Contact your state's insurance department

If you still believe your carrier is in the wrong, reach out to your state's department of insurance, which can explain your rights and help you file an official complaint. Depending on the state you live in, it may also help mediate your dispute.

Hire an attorney

While it's an expensive option, you may want a lawyer to advocate on your behalf if you've been denied or received an unsatisfactory payout. Some attorneys charge by the hour and others work on contingency, taking a percentage of the final settlement.

The fee for an attorney depends on whether or not the case goes to trial, according to homeowners advocacy group United Policyholders. Typically, it ranges from 33% to 40% of your settlement.

If your homeowners insurance claim is denied, your provider is required to tell you why and allow you to appeal the decision. If that doesn't resolve the issue, reach out to an independent adjuster or your state's insurance office. As a final option, consider getting legal representation.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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