Claims Are Getting Denied More. What Can Restoration Contractors Do?

The text "claim denied" behind ripped brown paper

If you’re a restoration company, you’re no stranger to discussing claims with restoration insurance adjusters. At One Claim Solution, we often discuss strategies restoration contractors can use to negotiate better claim payouts. But what do you do when a restoration claim is flat-out denied by a provider? Today, we’re here to talk about restoration claims denials and how to fight them.

The Rise in Property Insurance Claim Denials

If it feels like your restoration company’s claims are getting denied more often, it’s not just in your head. The uptick in denied claims is a trend that OCS is also seeing as a part of our work managing over several hundred million dollars in claims for restoration contractors nationwide.

“We’ve seen a noticeable uptick in the amount of denied claims coming from the carriers that has exponentially risen over the last year, year and a half, from what we saw the first six years or seven years of [OCS].” Josh Ehmke, OCS Co-Founder, says.

Why Are More Restoration Claims Being Denied?

If claim denials are rising, the obvious next question is “why.” In reality, this trend is probably driven by a combination of factors. Some people theorize that this rise could be driven by increased scrutiny, higher restoration costs, pressure for profit, automation, or a wide range of other factors. But, ultimately, what’s more important than why claims denials are rising is what you as a restoration contractor can do about it.

Preventing Unnecessary Restoration Claims Denial

It will always be easier to prevent a claim from being denied than to deal with a denial after the fact. So if you’re seeing an uptick in denials at your restoration company, begin by analyzing your claims submission process and making sure you have that mastered. Here are strategies you can use to prevent unnecessary restoration claims denials:

Thorough Documentation

We cannot over-emphasize how important it is to master your documentation process. If the quantity and quality of documentation you’re submitting is inconsistent, you are going to see higher claims denial rates than average for restoration contractors. You should be documenting the damage, the restoration process, labor hours, receipts, and more. Many of the restoration companies OCS works with find documentation management software to be helpful for their claims preparation process. Ultimately, consistency is more important than what specific software you use to collect or organize your restoration job documentation.

Understanding Property Insurance

A deep understanding of the insurance policies and the property insurance industry goes a long way when you’re trying to get a provider to pay for the work you’ve completed. Get familiar with coverage limits, exclusions, and the specific requirements common in policies. If you feel out of your depth trying to manage the claims side of a restoration business, seek the help of industry experts like OCS to navigate the process.

Building Relationships

Don’t overlook the importance of building relationships with restoration insurance adjusters. Just like in any other situation, having a previous relationship with your adjusters can help ease conflict and prevent issues, including restoration claims denials. Restoration insurance adjusters are just people trying to do their jobs, even when that job includes telling you bad news. Make an effort to treat restoration adjusters with kindness and respect, especially when you’re feeling frustrated. This will help you be able to collaborate effectively with them.

What to Do If You Believe Your Your Restoration Insurance Claim Has Been Wrongly Denied

If you’re at a stalemate with a carrier over a denied claim, you have a few options available to you:

File a lien on the property
Sue the carrier
Sue the homeowner
Begin the appraisal process

Litigation

Many restoration contractors are hesitant to file a lawsuit when a claim is denied, and it’s understandable why. Lawsuits can be a long and expensive process. Depending on the size of the denied claim, it doesn’t make financial sense. Conduct a cost-benefit analysis before initiating a lawsuit. If the claim is sizeable, it might be worth pursuing.

Appraisals

In most situations, the appraisal process is a more cost-effective way to resolve disputes, Josh explains. Appraisals are an alternative dispute resolution mechanism. The restoration company and insurance provider each hire an independent appraiser to assess the claim and come to an agreement. If the appraisers come to an impasse, the issue may escalate to an umpire. The agreement they come to about the claim’s value is a final decision.

While appraisals are usually faster and more inexpensive than litigation, they still cost money and take time. You should always conduct a cost-benefit analysis before beginning the appraisal process. For more advice on how to do this, check out this blog.

Partner with OCS to Reduce & Fight Restoration Claims Denials

Navigating the intricacies of insurance claims can be daunting, but you don’t have to face it alone. Partnering with OCS gives restoration contractors access to the expertise, tools, and support necessary to fight claim denials and secure fair compensation. Our in-house legal counsel makes fighting claims denials with litigation or an appraisal more affordable for contractors. Reach out today to see if we’re a good fit for your company.