From the perspective of an experienced first-party insurance attorney who has handled numerous property damage claims—including those arising from catastrophic wildfires such as the Marshall Fire in Louisville, Colorado in December 2021—homeowners often make critical errors when filing and attempting to resolve their claims.
These mistakes can lead to unnecessary delays, denials, or underpayments.
Below are the top ten mistakes, with specific reference to the challenges homeowners faced following the Marshall Fire and the broader context of single-family home claims:
1. Failing to Read and Understand the Policy Before a Loss Occurs
Many homeowners assume they have full replacement coverage, only to discover post-disaster that their policy contains exclusions, sub-limits, or actual cash value (ACV) provisions that significantly reduce their payout. Following the Marshall Fire, numerous homeowners were shocked to learn that their coverage limits were insufficient to rebuild, often due to outdated replacement cost estimates.
2. Delaying the Initial Claim Filing
Homeowners frequently wait too long to notify their insurer of the loss, thinking they need to first assess the damage themselves. In the aftermath of the Marshall Fire, some policyholders missed crucial deadlines imposed by their policies or failed to document immediate damage, leading to disputes over whether certain losses were caused by the fire or subsequent weather conditions.
3. Inadequate Documentation of the Loss
A common and costly mistake is failing to thoroughly document damages before initiating repairs or debris removal. Insurers frequently rely on policyholder-provided evidence to adjust claims. After the Marshall Fire, many homeowners did not take sufficient photos or videos of their destroyed homes, making it difficult to contest lowball estimates or improper depreciation deductions.
4. Accepting the First Settlement Offer Without Question
Insurance carriers often make initial settlement offers that are far below the true cost of repair or replacement. In cases involving State Farm policyholders affected by the Marshall Fire, some homeowners who accepted the first offer later realized they were underpaid by hundreds of thousands of dollars, leaving them unable to rebuild. Policyholders should always demand a detailed breakdown of how the insurer calculated their payout and be prepared to challenge deficiencies.
5. Underestimating the Scope of Additional Living Expenses (ALE) Coverage
Many homeowners are unaware that their policies cover more than just the cost of their home’s repair or reconstruction—they also cover necessary living expenses incurred due to displacement. Following the Marshall Fire, some victims failed to properly track their temporary housing, food, and transportation costs, leading insurers to dispute or deny ALE claims. Keeping detailed records and submitting timely requests is crucial.
6. Allowing the Insurer’s Adjuster to Control the Narrative
Insurance companies typically send their own adjusters to evaluate damage, but these professionals work for the insurer—not the policyholder. After the Marshall Fire, some homeowners relied solely on the insurer’s assessment, only to find that the estimated repair costs were woefully inadequate. Policyholders should always retain their own public adjusters or independent contractors to obtain unbiased repair estimates.
7. Not Understanding or Challenging Depreciation Calculations
When insurers apply depreciation to property damage claims, they often use methods that significantly undervalue a home’s structural components and personal property. Many Marshall Fire victims found that their insurers depreciated nearly everything, sometimes leaving them with payouts insufficient to replace essential items. Homeowners must demand clear explanations of depreciation calculations and, if necessary, challenge unfair deductions.
8. Failing to File a Proof of Loss Form on Time
Most homeowner insurance policies require the submission of a sworn proof of loss form within a specific time frame. After the Marshall Fire, some policyholders who missed these deadlines saw their claims delayed or outright denied. Homeowners should verify their policy’s requirements and submit the proof of loss promptly, ensuring that it is as detailed as possible.
9. Overlooking the Impact of Building Code Upgrades and Ordinance & Law Coverage
Many homeowners assume their policy will cover the full cost of rebuilding their home to current building codes. However, standard policies often exclude or severely limit coverage for code-required upgrades. In Louisville, Colorado, many Marshall Fire victims discovered that new building codes required expensive energy-efficiency upgrades, yet their policies provided little to no coverage for these costs. Reviewing and negotiating policy terms before a loss occurs can prevent this financial shock.
10. Failing to Hire an Attorney Early in the Process and Mistakenly Trusting the Insurance Company
Many homeowners mistakenly believe that their insurance company has their best interests at heart. However, insurers are profit-driven entities that prioritize minimizing payouts. After a disaster like the Marshall Fire, policyholders who relied solely on their insurer’s guidance often found themselves underpaid, denied coverage, or trapped in endless delays.
Homeowners should recognize early in the claims process that the insurance company is not their ally and that hiring an experienced first-party insurance attorney is often the most effective way to protect their rights.
Unlike public adjusters, who are limited in their ability to negotiate and lack legal authority to escalate disputes in court, attorneys offer several critical advantages:
- First, hiring an attorney signals to the insurer that the homeowner is serious about obtaining full compensation, which can lead to faster and fairer settlements.
- Second, attorneys can leverage attorney-client privilege, ensuring that sensitive discussions remain confidential—something public adjusters cannot provide.
- Third, while a public adjuster may help with documentation and negotiation, they cannot file lawsuits or hold insurers accountable for bad faith practices.
It is worth emphasizing that if a homeowner’s attorney can make a case for bad faith, in some jurisdictions, homeowners can receive up to three times the policy value—what attorneys call “treble damages”—to discourage insurance companies from that approach in the future.
Additionally, hiring an attorney improves the optics of the claim; stated differently, I have found that insurers are more likely to prioritize such a claim, not only in timing, but also in the amount paid to the homeowner. Insurers often exploit the perception that a public adjuster is simply seeking a higher payout, whereas an attorney’s involvement emphasizes the legal necessity of full compliance with policy terms and fair treatment under the law.
Homeowners who engage an attorney early avoid costly mistakes, maintain a stronger negotiating position, and significantly increase their chances of securing the compensation needed to rebuild. In the wake of a catastrophic loss, retaining legal counsel is not just an option—it is a necessity.
