Prepayments for insurance claims are not widely known by people who make claims. When an insured suffers a loss of significant magnitude, such as a flood, tornado, wildfire, hurricane loss, or a major water damage loss, an advance of a portion of the expected settlement is often issued by the insurance company. This situation also occurs regularly when a company has a loss and needs money up front.
It is customary and generally accepted practice for the insurance company to provide an advance in such cases. Please note that there is nothing in standard property insurance that relates to advances. It is usually just a courtesy that the insurance company extends to their policyholder.
However, they usually don’t offer to do it. You must request the advance.
Here’s an example. Joe Smith’s house is struck by lightning and a fire damages most of the house. Joe’s policy has $100,000 build limits, $50,000 content limits, $20,000 ALE limits. The house can be repaired for $70,000, which is less than the policy limits. However, the claims adjuster expects the content loss to exceed the $50,000 policy limits and the ALE loss to be $15,000. The loss adjuster sends his initial report to the insurance company and tells them that the loss on these three pieces of coverage will be approximately $135,000.
The insurance company could easily make an initial $25,000 to $35,000 down payment for content and ALE, and $40,000 to $50,000 for the home loss.
So, what do you do if your content is corrupted and you need the most basic things like new clothes and shoes? What if you need a contractor to secure the building and put tarps on the roof to keep further rain out of the building? Most people don’t have tens of thousands of dollars in their bank accounts that can be used to make repairs or replace personal property. Then the insurer issues an advance.
It is best to make your request in writing. Even if it’s just a handwritten letter, it’s best if it’s in writing. Write or type your request, keep a copy for your records and give the copy to your expert. It is also wise to send a duplicate to the claims department of your insurance company. Send it by overnight courier or registered mail. NEVER rely on the loss adjuster to ask for an advance on your behalf. He may be delayed with other work and may take days to ask. DO IT YOURSELF.
Take control of your claim, my friend! Ask for your advance payment EARLY in the claim process!
Insurance claims – Get an advance!
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