What Happens If The Insured Tenant And The Insurance Company Fail To Agree On The Amount Of Loss?

What Happens If The Insured Tenant And The Insurance Company Fail To Agree On The Amount Of Loss?

Insurance is a way to protect ourselves from financial losses. When you rent a house or apartment, you might get renter’s insurance to protect your belongings from theft, fire, or other damage. But what happens if the insured tenant and the insurance company fail to agree on the amount of loss?

Let’s break it down step by step in simple language.

Understanding Renter’s Insurance

What is Renter’s Insurance?

Renter’s insurance is a type of insurance policy that covers your personal belongings in a rental property. It helps you replace items if they are stolen or damaged due to certain risks like fire, theft, or vandalism. For example, if a fire destroys your furniture, renter’s insurance can help you buy new furniture.

Also read: Which Is A Positive Reason For Using A Credit Card To Finance Purchases?

Why is Renter’s Insurance Important?

Renter’s insurance is important because it provides financial protection. Without it, you would have to pay out of your pocket to replace everything you lost. This could be very expensive and stressful.

Filing an Insurance Claim

What is an Insurance Claim?

An insurance claim is a request you make to your insurance company asking them to pay for a loss. For instance, if your laptop is stolen, you file a claim with your insurance company to get money to buy a new laptop.

How to File an Insurance Claim

  1. Report the Incident: Inform your landlord and the police if necessary (for theft or vandalism).
  2. Contact Your Insurance Company: Let them know about the loss as soon as possible.
  3. Provide Details: Give them all the necessary details, including what was lost or damaged, how it happened, and any evidence (like photos or receipts).

Disagreements on the Amount of Loss

Why Disagreements Happen

Sometimes, the insured tenant (you) and the insurance company don’t agree on how much money should be paid for a loss. This disagreement can happen for several reasons:

  • Value of Items: You might think your items are worth more than what the insurance company is willing to pay.
  • Coverage Limits: The insurance policy might have limits on how much it will pay for certain items.
  • Depreciation: The insurance company might consider the age and condition of your items, offering less money due to depreciation (loss of value over time).

Example of a Disagreement

Imagine you have a TV that you bought for $1,000 two years ago. A fire damages the TV, and you file a claim. You believe the TV should still be worth $800, but the insurance company says it’s only worth $500 because it’s not new anymore. This is a common type of disagreement.

What Happens If The Insured Tenant And The Insurance Company Fail To Agree On The Amount Of Loss?

Review the Policy

  • Action: Check the insurance policy for coverage details and limits.
  • Example: If your TV was destroyed, confirm the policy covers electronics and understand depreciation clauses.

Provide Evidence

  • Action: Gather receipts, photos, and appraisals to support your claim.
  • Example: Submit the purchase receipt and recent photos of your $1,000 TV to show its condition before the loss.


  • Action: Discuss the claim with the insurance company and present your evidence.
  • Example: Explain why you believe the TV is worth $800 despite the insurance company offering only $500.

Involve a Third Party


  • Action: Use a mediator to help both parties reach an agreement.
  • Example: A mediator helps you and the insurance company agree on $650 for the TV.


  • Action: An arbitrator makes a binding decision.
  • Example: An arbitrator reviews the case and decides the TV’s value is $700, which both parties must accept.

Appraisal Clause

  • Action: Each party hires an appraiser, and they select a third appraiser for a final decision.
  • Example: Three appraisers decide the TV’s value is $750.

Legal Action

  • Action: If no agreement is reached, consider taking the insurance company to court.
  • Example: Hire a lawyer, file a lawsuit, and the judge awards you $700 for the TV.

What Are The Steps to Resolve Disagreements?

  1. Review the Policy

First, review your insurance policy carefully. Make sure you understand what is covered and the limits of the coverage. This can help you see if the insurance company is following the policy correctly.

  • Provide Evidence

Gather evidence to support your claim. This might include:

  • Receipts: Proof of purchase for the items.
  • Photos: Pictures of the items before and after the loss.
  • Appraisals: Professional assessments of the items’ value.
  • Negotiate

Talk to your insurance company and present your evidence. Explain why you believe their offer is too low. Be polite but firm. Sometimes, negotiation can help you reach a better settlement.

  • Involve a Third Party

If you still can’t agree, you might need to involve a third party. There are a few options:

  • Mediation: A neutral mediator helps you and the insurance company come to an agreement.
  • Arbitration: An arbitrator reviews the case and makes a decision that both parties must follow.
  • Appraisal Clause: Some policies have an appraisal clause. This means each party hires an appraiser, and the two appraisers choose a third appraiser. The decision of the appraisers is final.

Example of Mediation and Arbitration

Suppose your disagreement over the TV’s value continues. You decide to try mediation. A mediator listens to both sides and helps you reach a mutual agreement. If mediation doesn’t work, you move to arbitration. The arbitrator reviews the evidence and decides that the TV is worth $650. Both you and the insurance company must accept this decision.

Tips to Avoid Disagreements

  • Keep Detailed Records: Maintain records of all your belongings, including purchase receipts, photos, and appraisals. This makes it easier to prove their value if you ever need to file a claim.
  • Understand Your Policy: Read your insurance policy thoroughly. Make sure you understand what is covered, the limits, and any clauses like depreciation or the appraisal clause. If you have questions, ask your insurance agent to explain.
  • Communicate Clearly: When filing a claim, be clear and honest about what happened and what was lost. Provide as much detail and evidence as possible to support your claim.

Also read: What Are the Advantages and Limitations of Oral Communication Explain With Examples


What happens if the insured tenant and the insurance company fail to agree on the amount of loss?

Well, disagreements between insured tenants and insurance companies over the amount of loss can be challenging, but they can be resolved through understanding, communication, and sometimes involving third parties.

By being prepared and knowing your rights, you can navigate these situations more effectively. Remember, the goal of insurance is to help you recover from a loss, and with the right approach, you can ensure you get the support you need.

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