What is an insurance company’s obligation to honor a claim?

UPDATED: Sep 4, 2014

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What is an insurance company’s obligation to honor a claim?

My wife’s aunt had storm damage and wanted me to help her with her claim. Upon approval, she stated that she did not want the old 3 tab shingles and metal valleys that the old roof had but did not have extra money for the upgrade to dimensional shingles. Since shingle manufactures will now still warranty a roof over if a synthetic underlayment is used, I offered to make all of the upgrades which takes her warranty from a 20 year to a 30 year for the same price. The tear off labor was being replaced by the additional material cost. The insurance company found this out and is now withholding final payment. As homeowner with no mortgage doesn’t she have this right and isn’t the insurance company liable to pay out the claims worth regardless?

Asked on September 4, 2014 under Insurance Law, Ohio


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

The answer is that the insurer must pay out a valid claim--unless they have come to believe that the amount was inflated, there was fraud, or there was something else illegal or improper going on. You do not indicate why they are refusing to pay: if you do not know, your first step is to inquire and find out the reason for refusing to pay the final payment. It may be, for example, that since you are related to the insured (your aunt) they fear that the two of you may be somehow scamming the system (e.g. you actually did the work for much less than you billed for). Once you know the preciese reason for the denial, you will be in better shape to contest it.

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