Once you’ve filed a claim with your insurance company, you are officially in the pre-litigation/pre-suit phase.  This phase is consequential for many reasons, which we’ll discuss below and moving forward.  At this stage, it is important to recognize that this is the time and opportunity for you – the insured claimant – to put your best foot forward.  An insurance company will investigate the claim thoroughly and ultimately issue a decision on your claim (also known as a “claims determination”; “coverage decision”; “coverage determination”; “Explanation of Benefits (EOB)”).

            In this section, we explore the different types of coverage decisions that can be issued by an insurance company.  In short, there are three types of decisions an insurance company can make on your claim: (1) Full coverage; (2) Partial coverage/ partial denial; and (3) Full denial.  While these decisions are intuitive and easy to understand, they set the foundation for what’s to come. 

There are two important terms to know:

1. 1. Price of damages/coverage: what is the estimated price to repair or replace the damaged property back to its pre-loss condition.

   2. Scope of damages/coverage: what is the estimated scope of damages observed as a result of the reported loss.

Let’s explore why these are important:

1. 1. Full coverage: a full coverage determination essentially means the insurance company is in complete agreement that there was a covered loss under the insurance policy. The insurer will generally issue a payment check and attach the field adjuster/independent adjuster’s estimate of damages to provide the basis for payment. This type of coverage decision is the least common among the three.

   2. Partial Coverage/Partial Denial: a partial coverage/partial denial means the insurance company is in partial agreement with the reported loss. The partial agreement means the insurer agrees there is a covered loss, but SOME of the damages are not covered due to a policy exclusion. Common examples include water damage to kitchen cabinetry opens coverage for the cabinet replacement, but not the actual plumbing loss to repair the parts (because of a policy exclusion). Another example: hurricane loss opens coverage for the water leaks inside the home, but not the roof replacement. Like the full coverage, the insurer will generally issue a payment check and attach the field adjuster/independent adjuster’s estimate of damages to provide the basis for payment. This is generally the most common coverage decision among the three.
      

   3. Full Denial: a full denial means the insurance company concluded the reported loss is not covered under the policy for a variety of reasons. Most commonly, they will often include a specific or multiple policy provisions to explain why the claim is denied. Common examples include: a full denial for a roof replacement or kitchen cabinet replacement because the insurer concluded the damage was caused by long-term wear & tear, marring, and/or deterioration.