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First Party Insurance: Basics Every Policyholder Needs to Know


In the complex world of insurance, it's easy for policyholders to feel overwhelmed by the various types of coverage and the claims process. One often-overlooked but highly valuable form of insurance is first-party insurance. First-party insurance, also known as homeowner's insurance or property insurance, is a type of insurance policy that provides coverage to the policyholder and their property. It is designed to protect a property owner from financial losses and liabilities that may arise from various risks and events, including (but not limited to):

Property Damage: First-party home insurance typically covers damage to the insured home and its contents caused by perils such as fire, hail, lightning, theft, vandalism, windstorms, and more.

Personal Property: This insurance can extend coverage to personal belongings inside the home, such as furniture, electronics, and clothing.

Additional Living Expenses: If the insured home becomes uninhabitable due to a covered event, first-party home insurance may cover the cost of temporary accommodations, like hotel stays, during repairs or rebuilding.

Business Losses: Business interruption insurance is designed to compensate a business for the income it would have earned during the period of disruption if the covered event had not occurred.

Benefits of First-Party Insurance:

In the event of a covered loss, first-party insurance can provide immediate financial assistance to help you recover and mitigate the impact of the loss. First-party insurance policies are typically customizable to suit your specific needs and circumstances. You can choose the type and amount of coverage that aligns with your risk tolerance and financial situation. It's important to note that the specific benefits and coverage options of first-party insurance can vary widely depending on the type of policy and insurance company. Therefore, it's crucial to thoroughly review and understand your policy to ensure it meets your needs and expectations.

Claims Process Simplified:

The claim process begins with the policyholder notifying the insurance company about loss or damage to their property. This notification should be done as soon as possible after the incident. You’ll need to provide basic information about the incident and the extent of the damages or injuries.

Following the submission of your claim, the insurance company will send out an adjuster to investigate the claims and assess the damage. It is crucial to attend this inspection personally to guarantee a comprehensive evaluation of all damages.

Once the adjuster has assessed the damage, the insurance company will make a claim determination and potentially a settlement offer. Review this correspondence/offer carefully to ensure it covers all your damages. Don’t hesitate to negotiate if you feel the offer is insufficient.

In case your claim gets rejected or you find the settlement offer unsatisfactory, you have the option to contest the decision. This could entail presenting extra evidence, revising your claim, or seeking legal counsel.

How Can My Claim Be Denied or Underpaid?

First-party insurance policies often come with various exclusions and limitations that define the scope of coverage. These exclusions and limitations are crucial for policyholders to understand, as they outline the circumstances and scenarios in which the insurance company may not provide coverage. Here are some common exclusions and limitations found in first-party insurance policies:

Specific Perils or Causes of Loss: Most first-party insurance policies specify the perils or causes of loss that are covered. Common exclusions can include damage from earthquakes, floods, war, nuclear incidents, and intentional acts.

Wear and Tear: Policies often exclude coverage for damage resulting from regular wear and tear, gradual deterioration, or lack of maintenance. It's important for policyholders to maintain their property to prevent such issues.

Vacancy or Unoccupancy: Some policies have provisions that reduce or eliminate coverage if the insured property is vacant or unoccupied for an extended period. Policyholders must be aware of these provisions and take necessary precautions.

High-Value Items and Sublimits: Certain high-value items like jewelry, art, or collectibles may have sublimits in the policy. This means that coverage for these items is capped at a specified amount. Additional coverage, known as endorsements or floaters, may be needed for full protection.

Cosmetic Damage Exclusion: The cosmetic damage exclusion specifies that the insurance policy will not provide coverage for repair or replacement costs associated with cosmetic damage alone. Cosmetic damage refers to superficial or surface-level harm that does not impair the essential function or structural integrity of an item.

Is Legal Representation Necessary?:

Legal representation can add a lot of value to a claim, but it is not always necessary. Attorneys bring value in situations where there is a dispute - such as a denied or underpaid claim or a claim involving an issue of policy interpretation. In certain instances attorneys can also be helpful to assess strategy regarding your claim and throughout the claims process.  

At Barcus Arenas, PLLC we take great pride in going over all of these options with you and letting you know all of your options from the outset. To provide the best representation, we aim to provide the best advice to our clients first and foremost. As your counselors, we communicate with you and provide continuous support throughout the legal process. We understand that when something difficult happens in your life and you need outside help, you want to confide in someone you trust and someone who communicates with you through the process. We greatly value that aspect of our work and believe that a satisfied client is the best way to run a successful business.