And the problem is getting worse. The five biggest home-insurers as a group didn’t pay out on more than 44% of claims resolved last year, forcing homeowners and renters to fund repairs out of their own pockets, an analysis by The Wall Street Journal found.
The risk that a claim will result in no payment among the group—State Farm, Allstate, Liberty Mutual, United Services Automobile Association and Farmers Insurance—shot up from 36% a decade earlier, according to the analysis.
Several factors are driving nonpayment rates higher, according to industry analysts and executives. Prime among them: Insurers are responding to a yearslong run of postpandemic losses in their home-insurance businesses by getting tougher on claims.
One way they have done this is to raise deductibles, or the amount the customer has to pay before the insurer kicks in. Some companies applied higher deductibles to specific risks such as hurricane and hail, and changed certain deductibles from a dollar value to a percentage of the value of a home. They have also set tighter criteria for claims on expensive items like roof replacements.
Consumers hit by rising premiums are themselves selecting higher deductibles to save money, insurers and consumer advocates say. This sets consumers up for disappointment when they put in for claims.
Home insurers pitch policies as a peace-of-mind financial safety net. But customers can find the apparent guarantee of compensation for disasters evaporates when they come to claim. [...]
A spokesman for USAA, whose unpaid claims ticked up to 51% from 49% a decade ago, said the Journal’s analysis was misleading because it lacks important context around why claims may be closed without payment. That includes losses below a deductible, claims not pursued by customers or claims later reopened and paid, he said. Considering those factors, fewer than 6% of USAA claims were denied, he added.
There are other drivers of the rise in claims closed without a payout. More frequent losses from disasters, in part driven by climate change and increased development in danger-prone areas, are also triggering more claims that aren’t covered by the policies, such as for flood damage, insurers say. [...]
Location has a big influence on the odds of no payment. Insurers in Florida had the highest rate of no payouts, affecting more than two in five homeowner claims in 2024, significantly higher than the 34% five-year average for the Sunshine State. Back-to-back hurricanes in 2024—Helene and Milton—likely drove up rejections as homeowners claimed for flood damage that wasn’t covered, insurers said.
The fallout from Hurricane Milton, when insurers declined payments on claims from more than 95,000 Floridian homeowners, shows the main reasons companies say no.
Heading the list: deductibles. Insurers have sharply increased the typical deductible amount in recent years, while often introducing separate—even higher—deductibles for wind and hail damage in high-risk areas.
by Jean Eaglesham and Jaclyn Jeffrey-Wilensky, Wall Street Journal | Read more:
Image: WSJ
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Steps to consider if you believe your claim has been denied unfairly include:- Ask the insurance company for a letter setting out the reasons for the denial, and copies of their relevant documentation. Consumer group United Policyholders has a sample letter on its website.
- Collect any additional evidence you can to support your claim, such as photographs or reports from independent experts.
- File an appeal to the insurer: Instructions for doing this should be in the denial letter or policy document.
- If an appeal is denied, you can submit a complaint to your state insurance regulator.
- If you want outside help, consider asking a public adjuster or attorney if they will help fight your case. You can find a local public adjuster on The National Association of Public Insurance Adjusters website. Expect them to take a slice of any eventual payout.
