Homeowners insurance is a necessary expense for many homeowners. It provides protection against damage to the home and personal property, as well as liability protection in case someone is injured on the property. However, when homeowners file a claim with their insurance company, they may be required to sign a confidentiality agreement in order to settle the case.
WHAT HAPPENS WHEN YOU TRY TO SETTLE YOUR CLAIM?
Most Homeowners insurance companies require that the homeowners sign a release in order to settle their claim. The release has a number of different provisions in it that lay out the terms of the settlement. Most companies require a confidentiality agreement, also known as a non-disclosure agreement (NDA) to be included in the release. A NDA is a legally binding provision of the release that prohibits the homeowner from discussing the details of the claim or settlement with anyone else. This can include information about how poorly the insurance company handled the case, how much they initially paid vs. how much they settled the claim for, the cause of the damage, and any other details related to the case.
WHY DO INSURANCE COMPANIES DO THIS?
Insurance companies often require confidentiality agreements as a way to protect their reputation and keep sensitive information about their claims handling and settlements private. However, this can also make it difficult for homeowners to share their experiences with others and get advice on how to handle similar situations in the future.
Many insurance companies promote the narrative that premiums are extremely high because of litigation. The truth is litigation does cause an increase in costs for the insurance company. However, this is because you will typically see an insurance company improperly adjusts the claim when the homeowner doesn’t have an attorney in the hopes that the homeowner will just walk away. When the homeowner has no choice to hire an attorney to fight to get what they paid for the claim typically settles for the amount the insurance company should have actually paid for all along.
You might ask yourself why the insurance company doesn’t just pay the right amount in the beginning. The answer to that is very simple, money! The company knows that a certain percentage of homeowners will just live with the coverage decision. Thus, while they may pay more on some claims, they will pay far less on others.
WHY WOULD YOU SIGN AN NDA IF ITS SO BAD?
One might say “if the homeowner doesn’t want to sign it then don’t.” Its not that simple, most Homeowners Insurance companies will not make an offer to settle without that language. Homeowners may feel pressured to sign the confidentiality agreement in order to receive the settlement they are entitled to. This can be especially difficult for homeowners who have experienced a significant loss and need the funds to repair or rebuild their home. If the homeowner takes it out the company will say that those weren’t the terms they were offering the settlement on. It is much harder for a homeowner to outlast an insurance company in litigation. The insurance company has millions of dollars and your average homeowner doesn’t. The insurance companies know they can dangle a carrot in front of the average homeowner and they will sign the NDA so they can get something instead of waiting in litigation for years.
In some cases, homeowners may be able to negotiate the terms of the confidentiality agreement or have a lawyer review it before signing. It’s important for homeowners to understand the terms of the agreement and the potential implications it may have on their ability to share information about their case in the future.
In conclusion, homeowners insurance is an important investment for many homeowners, but the process of filing a claim and settling a case can be complicated. Confidentiality agreements can be a standard practice by insurance companies, but they can also limit the ability of homeowners to share information about their case with others. It is important for homeowners to understand the terms of the agreement and to seek legal advice if they have any concerns before signing.