Toolkit · Insurance

The Property Insurance Claim and Bad Faith Toolkit

15 U.S.C. § 1011

Type
Toolkit
Jurisdiction
National
Date
2024-06-25
Topic
Insurance

This toolkit assembles the working materials for a property insurance claim: the authority map, a first-forty-eight-hours protocol, a policy reading card with the three dates that decide claims, a contents inventory method, a scope comparison worksheet, an exclusions reference, an appraisal demand sequence, an additional living expense module, a denial and bad faith record protocol, and a catastrophe module. It is organized for retrieval rather than reading. Modules cover the scope versus price distinction that decides most disputes, the valuation vocabulary from actual cash value through coinsurance, the duties that can defeat a covered claim, the exclusions that surprise people including anti-concurrent causation, the appraisal clause that is the fastest remedy in the contract, contested causation and engineering reports, renters and condominium coverage, and the underinsurance problem that must be fixed before a loss. Model letters and practice notes by role are included.

The Property Insurance Claim and Bad Faith Toolkit

Insurance > Property Insurance Claims | Published 25 June 2024 - Updated 13 June 2025 | UpLaw - uplaw.us

Module 3 is a card with three dates on it. Those dates decide more property claims than every exclusion in the policy combined.

Keywords: mitigation, three dates, contents inventory, scope comparison, appraisal, ALE, depreciation, bad faith

How this toolkit is organized

Sixteen modules, each usable alone. Companions:

Module 1 — The authority map

Authority What it supplies
15 U.S.C. § 1011 · § 1012 · § 1013 Insurance regulated by the states — why nearly every answer is state-specific
15 U.S.C. § 45 Deceptive marketing conduct
42 U.S.C. § 4001 · § 4012a Flood coverage is separate; mandatory purchase
44 C.F.R. part 61 · part 62 Flood terms and strict proof of loss and suit deadlines
42 U.S.C. § 5121 · § 5170 · § 5174 Disaster assistance — a floor, not a substitute
12 U.S.C. § 2605 · 12 C.F.R. part 1024 Written requests to a servicer holding loss proceeds
26 U.S.C. § 165 Casualty loss deduction for the uninsured portion
9 U.S.C. § 2 · § 10 Appraisal framed as arbitration; narrow review
Fed. R. Evid. 702 · 703 Expert admissibility and bases
Daubert, 509 U.S. 579 (1993) · Joiner, 522 U.S. 136 (1997) · Kumho Tire, 526 U.S. 137 (1999) · Frye, 293 F. 1013 (1923) Causation gatekeeping; the analytical gap
Fed. R. Civ. P. 26 The retained engineer's prior testimony list

Module 2 — First forty-eight hours

Do: ensure safety · report and obtain a claim number · photograph and video every room before anything moves · photograph the exterior and the source · mitigate (tarp, board, extract) · keep every receipt · secure valuables · start a dated call log · call the mortgage servicer's loss draft department.

Do not: discard damaged property · begin permanent repairs before inspection · sign anything a contractor presents at the door · accept a "waived deductible" offer, which is insurance fraud in most states.

The call log is the only continuous record of the claim that will exist, especially after a catastrophe when adjusters rotate.

Module 3 — The policy card: three dates

Request a complete certified copy of the policy in week one. Then fill this in.

Date What it is Consequence of missing it
____ Recoverable depreciation claim deadline The withheld money is forfeited
____ Additional living expense limit (time and dollars) The clock runs whether or not you claim
____ Contractual suit limitation — usually from the date of loss The claim is barred, even while still open
____ Proof of loss due, if demanded Forfeiture in many policies
____ Appraisal demand deadline, if any The remedy is lost
____ Flood proof of loss — 44 C.F.R. part 61 Strict; rarely excused

Also record: all deductibles including any percentage wind or hurricane deductible · dwelling and contents on RCV or ACV · coinsurance requirement · ordinance or law and extended replacement cost endorsements · every sublimit.

Module 4 — Valuation vocabulary

Replacement cost — like kind and quality, no depreciation. Actual cash value — replacement cost minus depreciation. The two-stage payment — ACV first; recoverable depreciation released after repairs are completed and documented. Coinsurance — insure to a stated percentage (commonly 80%) of replacement cost or recovery is proportionally reduced even on a partial loss. Replacement cost is not market value — the purchase price included land; construction cost does not.

Three consequences. The first check is not the settlement · depreciation is recoverable only if claimed inside the deadline · some items (roofs, often siding) settle at ACV regardless.

Module 5 — Scope versus price

The single most important distinction in property claims.

Both sides use standardized pricing databases, so unit prices differ modestly. The disputes are about scope — what work the loss requires.

Seal and paint, or replace? Clean the cabinets, reface, or replace? Kitchen flooring only, or the continuous run into the adjoining room? Drywall to four feet or to the ceiling?

The method: obtain the insurer's estimate as a line-item document · obtain a contractor's estimate in the same format · build the comparison in Module 6.

Module 6 — Scope comparison worksheet

# Item / location Insurer scope Contractor scope Difference Basis Photo
1
2

For each row: the contractor's written reasoning, and a photograph of the condition supporting it.

Then send it item by item, in writing, requesting a written response to each numbered item. That document — not an argument about the total — is what moves the offer.

Module 7 — Contents inventory method

Room by room, then surface by surface, then container by container.

For each item: description · brand and model · age · original cost · quantity.

Photograph open drawers, closets, and cabinets before anything is removed.

Reconstruct from: online purchase history · card statements · photographs and videos taken for unrelated reasons · social media · warranty registrations · prior appraisals.

Flag non-restorable items: mattresses, upholstery, cosmetics, medications, food — frequently listed by adjusters as cleanable.

Obtain the restoration vendor's pack-out inventory and verify it against your own.

Watch the sublimits — jewelry, watches, furs, firearms, cash, securities, business property, collectibles are capped per category, not per item, unless scheduled.

Scale. A three-bedroom house holds two to four thousand items. Insurers pay what is claimed and do not volunteer what is omitted.

Module 8 — Exclusions reference

Exclusion The line that matters
Flood Surface water, storm surge, rising water — separate policy required
Water damage Sudden and accidental discharge covered; weeks or months of seepage excluded
Earth movement Earthquake, landslide, sinkhole, settling — separate coverage
Anti-concurrent causation An excluded cause contributing in any sequence excludes the whole loss; enforceability varies by state
Mold Small sublimit, or excluded except from covered water damage
Ordinance or law Code-required upgrades not covered absent the endorsement
Vacancy Coverage suspends or narrows after a defined period, often 60 days
Wear and deterioration Excluded — though ensuing loss from a covered peril may be covered

The named-peril asymmetry. Most forms cover the dwelling on an open-peril basis and contents on a named-peril basis — invisible until a contents claim is denied for a cause that would have been covered had it damaged the structure.

Module 9 — Appraisal sequence

  1. Confirm the dispute is about amount, not coverage.
  2. Locate the clause and any demand deadline.
  3. Demand in writing.
  4. Select a competent, disinterested appraiser with construction expertise — not an advocate.
  5. Appraisers select an umpire; an award agreed by any two binds as to amount.
  6. Each side pays its own appraiser and half the umpire.
  7. Determine whether appraisal tolls the suit limitation in your state — frequently it does not.

Fastest and cheapest remedy in the contract. Requires no lawyer. Almost nobody uses it.

Credibility with the umpire is the whole game.

Module 10 — Additional living expense

Covers the increase in living costs while uninhabitable — temporary housing, additional meal expense, pet boarding, storage, laundry, extra commuting, furniture rental.

Does not cover costs you would have incurred anyway. The mortgage payment is not an ALE item.

Document a baseline of normal expenses so the increase can be computed.

Request an advance in the first week.

Two frequent disputes: whether the residence is genuinely uninhabitable, and whether temporary housing is comparable rather than superior — the standard is comparable.

Module 11 — Denial and bad faith record

Demand a written denial citing the specific policy provisions. A denial citing none is an invitation to request one.

Request: the complete claim file · any expert or engineering report in full, with photographs and field notes, not the summary letter · the expert's qualifications · the date the investigation was completed.

File a state insurance department complaint — free, fast, effective at moving a stalled file.

Build the record in writing: every request, every submission, every unanswered call summarized in an email.

What establishes bad faith in practice: no investigation before denial · a report that never addresses contrary evidence · unexplained delay against the prompt payment statute · a valuation with nothing behind it in the file · misrepresenting policy terms · failing to advise of an approaching deadline.

In litigation, the objection to a thin engineering report is the Joiner analytical gap under Fed. R. Evid. 702.

Module 12 — Model letters

Complete policy request

"Re: claim [number], date of loss [date]. Please provide a complete certified copy of the policy in effect on the date of loss, including declarations, all forms, and all endorsements. Please confirm the applicable deductibles, whether dwelling and contents settle on replacement cost or actual cash value, and the deadlines for recoverable depreciation, additional living expense, and any contractual suit limitation."

Scope comparison transmittal

"Attached is a line-by-line comparison of your estimate dated [date] with the estimate of [contractor] dated [date], identifying [N] items present in one and omitted from the other and [N] where the scope differs. For each I have noted the contractor's reasoning and attached photographs. Please respond in writing to each numbered item."

Appraisal demand

"Re: claim [number]. The parties disagree as to the amount of loss. Pursuant to the appraisal provision, I demand appraisal. I have selected [name]; contact details enclosed. Please identify your appraiser within the period specified so the appraisers may select an umpire."

Denial documentation request

"Your letter of [date] denies this claim. Please identify the specific policy provisions relied upon, and provide (1) the complete claim file, (2) any expert report relied upon in full, including photographs, field notes, and data, and (3) the expert's qualifications. Please confirm the date the investigation was completed."

Servicer loss draft request

"Re: loan [number]. Insurance proceeds of $[amount] were endorsed to you on [date] and remain undisbursed. This is a request for information and notice of error under 12 U.S.C. § 2605 and 12 C.F.R. part 1024. Please provide your loss draft disbursement procedure, the balance held, required inspections, and the release schedule, and disburse the funds due at the current stage."

Module 13 — Contested causation

The recurring disputes: hail damage or twenty years of granule loss · a covered plumbing leak or excluded settling · wind before surge (anti-concurrent causation) · sudden discharge or long-term seepage.

The insurer's tool is a short engineering report, frequently conclusory.

The answer is a competing expert who inspects, tests, and shows the reasoning — engineer, roofing consultant, hydrologist, forensic meteorologist.

Request the report in full with photographs and field notes. Reports that will not survive close reading are frequently abandoned once requested.

Weather data — archived radar and station observations — is obtainable and frequently decisive on hail and wind.

Module 14 — Catastrophe module

Everything slows; adjusters rotate; expect to explain the claim three times and keep a written summary to resend.

Construction costs spike — what extended replacement cost exists for.

Contractors become scarce and predatory simultaneously. Verify licensing, avoid large deposits, read any "work authorization." Several states impose a mandatory cancellation window after a declared disaster.

Disaster assistance is not insurance — 42 U.S.C. § 5121, 42 U.S.C. § 5174. It does not duplicate insurance and applying waives nothing. Apply anyway.

Flood and wind get separated, two carriers, two rule sets, each incentivized to attribute damage to the other peril.

Check the state insurance department for post-disaster bulletins extending deadlines — real, and not communicated individually.

Module 15 — Before the loss: the five-minute review

  • [ ] Dwelling limit against current rebuilding cost, not market value
  • [ ] Contents at replacement cost or ACV?
  • [ ] Percentage wind, hail, or hurricane deductible?
  • [ ] Ordinance or law endorsement present?
  • [ ] Extended replacement cost present?
  • [ ] Water backup coverage?
  • [ ] Valuables scheduled above the sublimits?
  • [ ] Flood coverage, if the property is exposed?
  • [ ] For a condominium: bare walls or all-in master policy, and loss assessment coverage?
  • [ ] For a renter: contents, liability, and ALE limits?

None of this is available after the fire. Underinsurance is a coverage decision made years earlier, and no amount of skillful claim handling repairs it.

Module 16 — Failure modes and three sentences

Ranked: not photographing before removal · not requesting the complete policy · banking the ACV check · never claiming recoverable depreciation · under-inventorying contents · accepting a summary estimate · never claiming ALE · failing to mitigate or keep receipts · missing a proof of loss deadline · guessing in an examination under oath · never invoking appraisal · signing an assignment of benefits · missing the suit limitation.

"Please send me a complete certified copy of the policy."

"Let's go through the two estimates line by line."

"I'm invoking the appraisal provision."

Module 17 — A worked claim

The loss. Kitchen fire. The fire department vents the roof and puts eleven inches of water in the basement. Smoke damage through the second floor.

The first offer. $38,400 estimate, $26,900 check — the difference being recoverable depreciation. The contractor's estimate is $91,000. Neither number is dishonest; the gap is the ordinary product of a trained estimator writing the scope against a homeowner who does not know the word.

Module 2. Photograph every room before removal. Tarp and keep the receipt. Call the servicer's loss draft department.

Module 3. Request the complete policy. Three dates go on the card, including a two-year suit limitation running from the date of loss.

Modules 5 and 6. Two contractor estimates in line-item format, then the comparison: ceiling sealed versus replaced · cabinets cleaned versus replaced · flooring stopping at the kitchen doorway versus the continuous run · basement extraction versus extraction plus subfloor · no line item at all for the code-required rewiring, which is an ordinance or law item covered only because the endorsement was bought years earlier.

Sent item by item in writing, the comparison moves the offer to $61,000 — with no lawyer involved.

Module 9. Still short on cabinets, flooring, and electrical. Appraisal demanded. An appraiser with genuine construction expertise, an agreed umpire, and an award of $79,400.

Modules 4 and 10. Repairs completed, completion documentation submitted inside the deadline, recoverable depreciation claimed. Eleven weeks of ALE claimed with receipts kept from week one, because the policy was read in week two.

What made the difference. No lawyer and no argument: a policy read early, photographs before removal, receipts kept, a line-by-line scope comparison, and one clause invoked that had been in the contract the whole time.

Module 18 — Who works for whom

The insurer's adjuster — staff or independent — writes the estimate that becomes the offer. Professional, frequently decent, not neutral. "Independent" adjusters are retained by the insurer, and catastrophe adjusters brought in from other states may be unfamiliar with local construction pricing.

The public adjuster works for the policyholder for a percentage — typically five to fifteen percent, capped by statute in many states — and writes the competing scope. On a significant loss they frequently add more than their fee.

Cautions: verify the license · read the contract's term and cancellation rights · beware door-to-door solicitation after a disaster, prohibited within a waiting period in several states · they cannot practice law · and the fee is generally calculated on the entire recovery including amounts already offered, unless the contract says otherwise.

The contractor writes the estimate to do the work — and a reputable line-item estimate is the single most useful document a policyholder can obtain.

Assignment of benefits. Convenient, and it transfers control of the claim to a party whose interest is being paid for its work rather than maximizing your recovery. Heavily regulated in several states. Read what is signed — see Hiring a Contractor and Resolving a Construction Dispute: A Practical Checklist.

Managed repair programs. Convenience and speed against a contractor whose ongoing relationship is with the insurer. Whether an insurer may compel participation is a state-law question.

When counsel is warranted: a denial citing a specific exclusion · an examination under oath in a significant loss · an approaching suit limitation · a total loss · a coinsurance dispute · and any case where an engineering report is the entire basis of denial. For a scope dispute alone, appraisal is usually better and cheaper.

Module 19 — Renters, condominiums, and the mortgagee

Renters. The policy covers personal property, liability, and ALE — nothing about the building. Three points: the landlord's policy does not cover the tenant's belongings · ALE is the coverage renters most need and least understand · and the liability coverage matters because a landlord's insurer will subrogate against an uninsured tenant who caused the fire. Tenancy consequences of a casualty — abatement, termination, repair duties — are in Landlord and Tenant Law: A Comprehensive Guide to Leases, Habitability, Deposits, and Eviction and Defending an Eviction and Enforcing a Tenant's Rights: A Practical Checklist.

Condominium owners. The declaration sets the line, not the policies. A bare walls master policy leaves everything inward to the owner; an all-in policy covers original installations, leaving upgrades to the owner. Read the declaration — the standard unit-owner policy sold without reference to it is frequently mismatched. Loss assessment coverage responds where the association levies for a shared loss or a large master deductible; deductibles in the tens of thousands are common and are allocated to owners. See Homeowners and Condominium Associations: A Comprehensive Guide to Governance, Assessments, and Enforcement and Challenging or Enforcing an HOA Rule, Fine, or Assessment: A Practical Checklist.

The mortgagee. The check carries two names. The servicer escrows and disburses in stages against inspections — slow, frequently understaffed after a disaster, and a common source of delay unrelated to the insurer. Call the loss draft department the same week, request the procedure in writing, and use the Module 12 letter if funds sit undisbursed.

Module 20 — Practice notes by role

Policyholders. Three acts carry most of the value: request the complete policy in week one · photograph everything before removal · build the scope comparison. Then write the three dates on a card.

Public adjusters. The scope document is the product. Verify licensing and fee caps, respect post-disaster solicitation windows, and be explicit about the line between adjusting and practicing law.

Counsel. Screen for the suit limitation date first, every time. Then: whether appraisal has been demanded and whether it tolls · the exact provisions cited in the denial · the engineering report in full with field notes · prompt payment deadlines · and whether the state recognizes a private action for unfair claims practices.

Adjusters. The denials that generate exposure share a profile — no inspection, a conclusory report, unexplained delay, and a valuation with nothing behind it. Each is avoidable and each is cheaper to avoid than to defend.

Everyone, before a loss. Module 15, once a year, in five minutes. Underinsurance is not a claims problem; it is a coverage decision made years earlier that no claim handling can repair.

Module 21 — Where a property loss becomes something else

A significant loss rarely stays inside the insurance claim, and the adjacent problems run on their own clocks.

The mortgage. A household paying for temporary housing while a claim is unresolved frequently falls behind on the loan. Post-disaster forbearance is available and its terms matter — whether missed payments become a lump sum, a repayment plan, or a deferral. See Sixty Days Behind: How a Mortgage Default Becomes a Foreclosure and Where It Can Be Stopped and The Foreclosure Defense and Loss Mitigation Toolkit.

The repair itself. The rebuild is a construction project with its own contract, change orders, lien exposure, and defect risk — and it is frequently entered under time pressure with a contractor chosen from a list. See Residential Construction and Home Improvement: A Comprehensive Guide to Contracts, Change Orders, Liens, and Defects and The Home Improvement and Construction Dispute Toolkit.

Contractor debt. Where a contractor is paid from proceeds and does not pay subcontractors, mechanics liens attach to the property notwithstanding that the owner paid. Lien waivers at each draw are the answer.

Deadlines running in parallel. The suit limitation, the proof of loss, the depreciation deadline, and any disaster assistance appeal all run simultaneously and independently. See Calculating and Preserving a Limitations Deadline: A Practical Checklist and The Limitations, Deadlines, and Timeliness Toolkit.

Resolution. Coverage disputes that do not resolve through appraisal or a department complaint settle far more often than they are tried, and the preparation is the same as for any mediation. See Preparing for and Attending a Mediation: A Practical Checklist and The Mediation and Negotiation Toolkit.

And the vacancy trap, once more. A property held in an estate, or vacated during a long repair, may fall outside coverage after a defined vacancy period — commonly sixty days. This is the single most avoidable uninsured loss in this field. See Opening and Administering a Probate Estate: A Practical Checklist.

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