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Insurance claim advance payment is not widely known by those who file claims. Often, when an insured suffers a loss of significant size, such as a flood, tornado, wildfire, storm damage or major water damage, an advance payment of a portion of the anticipated settlement is issued by the insurance company. This situation also occurs regularly when a business has losses and needs money up front.
In this type of instance it is a customary and widely accepted practice for the insurance company to issue an advance payment. Keep in mind that there is nothing in a standard property insurance policy that deals with advances. It is usually just a courtesy that the insurance company extends to its policyholders.
However, they usually do not offer to do so. You must request in advance.
Here’s an example. Jo Smith’s house is struck by lightning and a fire destroys much of the house. Joe’s policy has a $100,000 building limit, $50,000 contents limit, $20,000 ALE limit. The home can be repaired for $70,000, which is less than the policy limit. However, the adjuster expects the contents loss to exceed the policy limit of $50,000, and ALE’s loss to be $15,000. The adjuster sends his first report to the insurance company, telling them that the loss on these three parts of coverage is expected to be approximately $135,000.
The insurance company can easily issue an initial advance payment of $25,000 to $35,000 for contents and ALE and $40,000 to $50,000 for dwelling loss.
So, what do you do if your stuff gets damaged and you need the most basic things like a change of clothes and shoes? What if you need a contractor to secure the building and put a tarp on the roof to prevent further rain from building up? Most people do not have thousands of dollars in their bank accounts that could be used to start repairs, or replace personal property. Only then the insurance company issues the advance.
It is best to make your request in writing. Even if it is just a handwritten letter, it is best in writing. Write or type your request, keep a copy for your records, and give a copy to your adjuster. It’s also a good idea to send a duplicate copy to the claims department of your insurance company. Send it by overnight courier or certified mail. Never rely on the adjuster to ask for an advance on your behalf. He may be delayed on other work and it may be days before he asks. do it Yourself.
Mind your assertions, my friend! Request your advance payment early in the claim process!
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