For property owners, few situations are more frustrating than finding out your insurer won’t honor the coverage you expected, especially when the property in question is a home, a business, or part of an investment portfolio. However, disputes over insurance coverage are extremely common and can arise whenever you and your insurer fundamentally disagree over whether a loss is covered, how much is owed, or how quickly benefits should be paid.
For business owners, these disagreements can threaten operations and payroll. For landlords and real estate investors, they can jeopardize rental income and property values. And for homeowners, it can delay critical repairs, force difficult decisions, and put your personal financial recovery at risk.
In this guide, we’ll walk through your options for addressing an insurance coverage dispute. We’ll cover:
- Practical steps to take at the outset
- Strategies for building a strong claim
- Legal avenues for resolution
- Signs it’s time to bring in experienced counsel
At Merlin Law Group, we’ve recovered over $2 billion for our clients in disputes of all sorts with insurers across the country. If you’re deciding whether you should talk to a lawyer about a situation with your insurer, don’t hesitate to contact us today.
What Is an Insurance Coverage Dispute?
An insurance coverage dispute is, in simple terms, a disagreement between you and your insurer over whether your policy requires them to pay for a loss and, if so, how much and under what conditions. You file a claim expecting the protection you’ve paid for; they push back, delay, or deny.
For high-value property owners, these disputes often surface in familiar—and frustrating—ways. For example:
- Condo associations may face refusals for coverage of water intrusion damage, with the insurer seizing on narrow maintenance exclusions despite clear evidence of a sudden, covered loss.
- Industrial property owners might encounter deep undervaluations after a fire when a carrier insists that specialized machinery is worth far less than the actual cost to replace it in the current market.
- For homeowners, your insurance company may quietly whittle down coverage for premium finishes or custom architectural details, replacing them instead with lower-grade materials that diminish both quality and property value.
Why does this happen?
Some disputes are entirely honest. Insurance contracts are complicated documents, easily subject to confusion and misinterpretation if you don’t specialize in insurance law.
But make no mistake, insurance companies are in the business of collecting premiums and limiting payouts. Every dollar they don’t pay—even on legitimate claims—directly benefits their bottom line. Delays buy them time, and lowball offers put pressure on policyholders to accept less than they’re owed, especially if the dispute is holding up urgent repairs or disrupting revenue.
This imbalance of resources and urgency is precisely why policy coverage disputes can be so contentious and why a well-prepared, assertive response is critical.
What Are Some Issues That May Lead to Insurance Coverage Disputes?
Insurance contracts are dense, technical documents where a single sentence (or even a single word) can determine whether your loss is covered. For property owners with substantial holdings, overlooking those details can put millions at risk.
Carefully reviewing your policy terms isn’t just a formality; it’s a safeguard. Clauses on exclusions, deductibles, and conditions precedent to coverage can operate as hidden tripwires—seemingly harmless at first glance, but powerful tools for insurers looking to limit or deny payment later.
Some of the most common triggers for coverage disputes include:
- Unclear or ambiguous policy language: Vague wording that leaves room for “interpretation,” often in the insurer’s favor
- Broad exclusions: Provisions that carve out entire categories of loss, such as certain water damage or mold, that may be applied more aggressively than the policyholder anticipated
- Deductible misapplications: Inflated or improperly calculated deductibles that drastically reduce the payout
- Underwriting omissions: Missing or incomplete property details in the application process, which the insurer later uses to challenge coverage
- Technical denials: Rejections based on missed deadlines, incomplete forms, or other procedural grounds that have little to do with the merits of the claim
In practice, these provisions and technicalities can be leveraged to slow the claims process, pressure policyholders into accepting reduced settlements, or avoid paying altogether. If you own or manage a high-value property, such tactics can turn what should be a straightforward claim into a drawn-out battle.
First Steps to Take During a Dispute
When a dispute arises from one of the exclusions, ambiguities, or technicalities we just discussed, start taking careful records of every improvement you make to the property and every interaction you have with your insurer. The more organized and well-documented your position, the harder it will be for the insurance company to delay or diminish your claim without consequence.
Start by documenting everything. This includes the original claim submission, any correspondence with insurance adjusters, and every phone call (noting the date, time, and name of the representative). If you receive a denial, insist on a written explanation that cites the specific provisions of your policy the insurer believes justify their position. This creates a clear paper trail and forces them to commit to their reasoning.
From there, focus on building your evidentiary file.
- Take comprehensive photographs and videos of the property damage, ideally with time stamps.
- Secure expert assessments from engineers, contractors, or appraisers who can provide independent valuations and causation reports.
- Gather receipts, invoices, and proof of ownership for damaged property, as well as estimates for repair or replacement.
In many cases, it’s also worth engaging a licensed public adjuster early in the process. These professionals work exclusively for policyholders, not insurers, and can provide a second opinion on the value of your loss. Their involvement can also help counter the insurer’s tendency to understate the scope or cost of the property damage.
How Can I Resolve a Disagreement with My Insurance Company Over Coverage?
Once a dispute has surfaced, you have several potential avenues for resolution. The right approach will depend on the complexity of the disagreement, the size of the claim, and the insurer’s willingness to engage in good faith.
Negotiation
The first step is often direct negotiation with the insurer. This means identifying the specific points of disagreement—whether it’s the interpretation of a policy provision, the valuation of damages, or the application of a deductible—and addressing them with evidence.
Provide your supporting documentation, cite relevant policy language, and be prepared to challenge assumptions. Written communication is best, as it creates a verifiable record of your efforts to resolve the matter without escalation.
Mediation
If negotiations stall, mediation may be the next step. Mediation involves a neutral third party who facilitates discussion between you and the insurance company with the goal of reaching a mutually acceptable settlement. While the mediator doesn’t have the power to impose a decision, this process can be effective in cases where both parties are willing to explore compromise. Mediation can also save time and cost compared to more formal proceedings, though its success depends heavily on the insurer’s cooperation.
Arbitration
Some policies contain clauses requiring arbitration to resolve disputes. Arbitration is a more formal process than mediation, and the arbitrator—also a neutral third party—has the authority to make a binding decision. This means you may be legally obligated to accept the outcome, even if it’s not favorable.
Arbitration can be faster than litigation, but it can also limit your ability to fully challenge an insurer’s bad faith conduct in court. It’s critical to review your policy to determine whether arbitration is mandatory and what rules govern the process.
Litigation
When the stakes are high—particularly if the claim involves substantial amounts of money or evidence of bad faith practices—filing a lawsuit may be the most effective way to protect your rights.
Insurance coverage litigation opens the door to full judicial oversight, discovery of the insurer’s internal records, and the possibility of recovering not only the benefits owed under the policy but also additional damages in cases of proven bad faith. While litigation is typically more time-consuming and expensive, often it’s the only way to compel an insurer to honor its contractual obligations.
When To Consider Legal Action
Even with thorough documentation, strong negotiation, and attempts at mediation or arbitration, there are times when an insurer’s conduct makes legal action not just an option, but a necessity. Knowing the warning signs can help you decide when it’s time to move from informal resolution to a courtroom strategy.
Red Flags That Signal It’s Time to Escalate
- Unreasonable settlement offers that fall far below documented repair or replacement costs
- Excessive delays: weeks or months without meaningful updates, often under the pretext of “ongoing review”
- Denials that defy the policy, where the insurer cites exclusions or limitations that don’t actually apply
- Sudden policy reinterpretations that change the meaning of key terms after a claim is filed
Common Bad Faith Practices
Insurance providers owe policyholders a duty of good faith and fair dealing. When they breach that duty, it’s considered “bad faith.” Examples include:
- Misrepresenting policy provisions to suggest less coverage than actually exists
- Failing to conduct a reasonable investigation before denying a claim
- Withholding critical information about policy coverage or claim requirements
- Dragging out the process in hopes the policyholder will accept a lower settlement out of frustration or financial need
These tactics are not simply frustrating—they can cause significant financial harm, especially when they interfere with restoring operations at a commercial property or protecting the value of a high-end home.
When and How to Engage an Attorney
If you encounter any of these red flags, it’s wise to consult an attorney who specializes in insurance coverage disputes. A qualified lawyer can assess the strength of your claim and potential damages, demand internal documentation from the insurer through discovery, and pursue compensation not only for the covered loss but, in bad faith cases, for additional damages and attorney’s fees. For high-value insurance claims, having counsel early can also deter further bad faith behavior since insurers know they will be held accountable.
What Are the Odds of Winning an Insurance Appeal?
There’s no universal win rate, because outcomes depend heavily on the facts of the case, the strength of your evidence, and the forum in which the dispute is decided. However, policyholders represented by experienced counsel often have a markedly higher success rate than those handling appeals on their own, particularly in bad faith claims where legal leverage matters.
How Long Does It Typically Take to Resolve an Insurance Coverage Dispute?
Timeframes vary widely. A straightforward negotiation may conclude in weeks, while complex litigation can take a year or more—especially if expert testimony, extensive discovery, or appeals are involved. Many cases resolve in six to twelve months, but high-value disputes against entrenched insurers can extend beyond that.
The Benefits of Hiring an Insurance Lawyer
Insurance policies aren’t written for clarity. They’re drafted in precise, often technical language that can be interpreted in more than one way. Insurers know this, and they frequently rely on those ambiguities to limit payouts.
An experienced property insurance lawyer can level the playing field by applying deep knowledge of policy interpretation, industry practices, and the legal standards insurers must meet. A skilled attorney can interpret complex policy language to identify coverage issues the insurer may be overlooking—or deliberately ignoring. Lawyers negotiate from a position of strength, using evidence and legal precedent to push for a fair settlement. Furthermore, with an attorney, you can pursue litigation when necessary, leveraging the court’s authority to compel document production, obtain testimony, and hold insurers accountable for bad faith conduct.
Policyholders who work with attorneys specializing in insurance disputes generally enjoy a higher rate of successful outcomes, whether measured in settlement amounts, speed of resolution, or recovery of punitive damages in bad faith cases. Specialized counsel can also preserve insurance claims that might otherwise be lost to procedural missteps or missed deadlines.
At Merlin Law Group, we focus exclusively on representing policyholders. For 40 years, our attorneys have taken on some of the largest insurance carriers in the country, recovering hundreds of thousands to millions of dollars for clients in disputes involving private homes, commercial properties, multi-unit residential complexes, churches, farms, and public facilities.
Our track record reflects a simple truth: when insurers know they’re facing experienced, trial-ready counsel, they’re far more likely to meet their contractual obligations.
Call Merlin
If you’re mired in a dispute over coverage with your insurer, you don’t have to navigate the process alone. We have decades of experience holding insurance companies accountable and securing full, fair recoveries for policyholders.
Consult with a professional who understands both the language of your policy and the tactics of the insurance industry. Your investment—and your peace of mind—are worth protecting.
Contact Merlin Law Group for a free consultation with an attorney
