Was Your Homeowners Insurance Claim Underpaid?
Most homeowners expect their insurance company to help them recover after a loss. Instead, many discover that the payment they receive falls thousands of dollars short of what is actually needed to repair their home.
An insurance company may acknowledge coverage and issue a check, but that does not automatically mean the payment is correct. Many homeowners only realise there is a problem after receiving contractor estimates, beginning repairs, or discovering that important items were left out of the carrier’s estimate.
At Herrera PLLC, Jonathan Herrera represents Texas homeowners in first-party property insurance disputes involving underpaid claims, delayed payments, and bad faith insurance practices. Before becoming an attorney, he spent more than a decade handling insurance claims as an adjuster and later worked as an insurance defense attorney. That experience provides valuable insight into how insurers evaluate property losses and the methods sometimes used to minimise payments.
Learn more about Jonathan Herrera’s background, legal experience, and insurance industry knowledge.
How Do Homeowners Insurance Claims Get Underpaid?
Many homeowners assume an insurance company estimate represents the true cost of repair. In reality, underpayments often occur because important costs are overlooked, underestimated, or excluded.
Common reasons claims are underpaid include:
- Missing repair items in the estimate
- Outdated pricing data
- Incorrect depreciation calculations
- Failure to include code-required upgrades
- Disputes over repair versus replacement
- Improper deductible calculations
- Denied supplemental claims
- Incomplete inspections
For example, a roof estimate may include the cost of shingles but omit flashing, decking repairs, ventilation components, or building code requirements. The estimate appears reasonable until the contractor’s actual proposal reveals a significant shortfall.
How Can You Tell If Your Claim Was Underpaid?
Many homeowners do not realise they were underpaid until weeks or months after receiving a check.
Warning signs may include:
- Contractor estimates significantly exceed the insurance payment
- Additional damage is discovered during repairs
- Supplemental requests are denied without explanation
- Depreciation is withheld and never released
- Repairs cannot be completed within the approved budget
- The carrier’s estimate omits obvious damage
If your contractor’s scope of work looks substantially different from the insurance company’s estimate, the claim may deserve a closer review.
What Does Texas Law Require Insurance Companies to Do?
Texas law requires insurance companies to investigate, evaluate, and pay covered claims within specific timeframes.
The Texas Prompt Payment of Claims Act, found in Chapter 542 of the Texas Insurance Code, establishes deadlines for:
- Acknowledging claims
- Investigating losses
- Accepting or rejecting coverage
- Issuing payment
When a carrier fails to meet these obligations, additional remedies may be available.
In some situations, policyholders may recover statutory interest and attorney’s fees in addition to the unpaid portion of the claim.
Claims involving wind, hail, hurricanes, and other weather-related losses may also be affected by Chapter 542A of the Texas Insurance Code.
When Does an Underpayment Become a Breach of Contract?
An insurance policy is a contract.
When a carrier pays less than what the policy requires, the underpayment may constitute a breach of that contract.
These disputes commonly involve disagreements regarding:
- Scope of repairs
- Replacement costs
- Actual cash value calculations
- Policy interpretation
- Covered versus excluded damage
- Code upgrade requirements
Determining whether a breach occurred often requires a detailed review of the policy language, inspection findings, estimates, and claim handling history.
Can an Insurance Company Be Liable for Bad Faith?
Texas law requires insurers to treat policyholders fairly.
Chapter 541 of the Texas Insurance Code prohibits unfair settlement practices, including failing to attempt a prompt, fair, and equitable settlement when liability becomes reasonably clear.
Bad faith conduct may include:
- Misrepresenting policy coverage
- Ignoring evidence supporting the claim
- Conducting inadequate investigations
- Delaying payment without justification
- Refusing to pay benefits that are clearly owed
A simple disagreement about value does not automatically create a bad faith claim. However, when an insurer’s conduct becomes unreasonable or dishonest, additional remedies may be available.
How Does the Appraisal Process Work?
Many Texas homeowners insurance policies contain an appraisal provision.
Appraisal allows the parties to resolve disputes regarding the value of a loss without pursuing full litigation.
The process generally involves:
- Each side selecting an appraiser.
- The appraisers attempting to agree on the amount of loss.
- If necessary, an umpire helping resolve disagreements.
Appraisal can be an effective tool in underpayment cases, but the outcome often depends on the quality of the evidence and the professionals involved in the process.
How Does Jonathan Herrera’s Background Help Homeowners?
Few attorneys have worked on both sides of the insurance industry.
Before representing policyholders, Jonathan Herrera spent more than a decade handling insurance claims and later defended insurers as an attorney. That experience provides firsthand knowledge of claim evaluation, estimating practices, coverage analysis, and dispute resolution.
Today, he uses that experience to help homeowners challenge underpayments and pursue the full benefits available under their policies.
Learn more about Herrera PLLC’s insurance law practice.
What Should You Do If You Believe Your Claim Was Underpaid?
If you suspect your claim was underpaid:
- Obtain a detailed contractor estimate
- Compare estimates line by line
- Preserve all claim documentation
- Save repair invoices and photographs
- Keep records of communications with the carrier
- Avoid signing releases before understanding your rights
Early evaluation often helps identify issues before important rights are lost.
Speak Directly With Jonathan Herrera About Your Underpaid Homeowners Claim
If your homeowners insurance claim was underpaid, delayed, or improperly handled, Herrera PLLC is available to review the situation and discuss your options.
Jonathan Herrera personally handles client matters and works directly with policyholders throughout the dispute process.
Frequently Asked Questions
Yes. Receiving a payment does not necessarily mean the claim was handled correctly. If the amount paid does not reflect the actual cost of repair, additional recovery may still be available.
The Act establishes deadlines for insurance companies to acknowledge, investigate, and pay claims. When those deadlines are violated, policyholders may be entitled to statutory remedies.
Not automatically. However, significant differences between contractor estimates and insurance estimates often warrant further investigation and negotiation.
Depreciation is a reduction in value based on age and condition. Incorrect depreciation calculations are a common source of underpaid claims.
In many situations, yes. Repair invoices, photographs, contractor estimates, and other documentation may still support an underpayment claim.