Customers and home insurers disagree on claim payments for a variety of reasons, ranging from fine print buried in a policy to disagreements over the true cost to repair your house.

If you believe you are being taken advantage of, you do not have to accept it. Here's how to argue your point.

What to do when your home insurance claim is denied

If your insurer refuses to pay your claim, follow these steps.

Read your policy and denial letter carefully

Confusion about your home insurance coverage can lead to claim payment disagreements.

Examine your homeowners insurance policy before getting worked up about a denial. Check to see if you're covered for the disputed damage and what your coverage's dollar limits are. Your claim, for example, may be denied because the cause of the damage is expressly excluded in your policy. Examples of such exclusions include flooding and earthquakes.

In most cases, your insurer will send you a letter explaining why your claim was denied, citing the relevant section of your policy. If you did not receive this letter or require further clarification, please contact your insurance company.

Knowing what you're entitled to under your policy will help you make your case if you're correct. If you aren't, it will prevent you from wasting time and energy on futile appeals.

Build a case

If you still believe your claim should be covered, gather evidence to back up your claim.

Assume your insurance company denied your claim because it believed the damage was the result of your carelessness. To counteract this, you could keep receipts proving that you have performed routine maintenance on your property. You can also hire an independent contractor to confirm that the damage was caused by a covered problem rather than a lack of maintenance.

A public insurance adjuster may be able to help as well. A public adjuster, unlike the insurance company's adjuster, works on your behalf and can help you get the most out of your insurance coverage. If they agree that your claim should be paid, they can assist you in negotiating with your insurance company.

Appeal the claim denial

Once you've gathered evidence to support your case, write an appeal to your insurance company. Explain your position, include supporting documentation, and request that the claim be reviewed by an adjuster.

Choose the certified-mail option at your post office to have a record of the exact day your letter is sent and received.

Even if you're fuming on the inside, be polite. Don't threaten to hire a lawyer. If you begin with an adversarial tone, your insurer may decide to let its lawyers do the talking.

File a complaint with your state insurance department

If your adjuster refuses to budge, file a complaint with your state's insurance department.

According to Amy Bach, executive director of United Policyholders, a consumer advocacy group, having the state insurance department on your side may give you some negotiating leverage.

Unfortunately, she observes, state insurance departments may not always have the authority to settle disputes between insurers and policyholders.

She claims that the insurance department will assist if possible, so it's certainly worth a shot, especially if you want to avoid hiring a lawyer.

Consider mediation

Hiring an impartial person, or mediator, to work directly with you and an insurance company representative to help you reach an agreement is what mediation entails.

Unless your policy or state law requires your insurer to pay, you and your insurer may split the cost of mediation. The mediator can be appointed by the court or a private professional chosen by both parties. You can also go through a state-sponsored mediation programme, which you can usually find on the website of your state's department of insurance.

Mediation is typically quick, but it is nonbinding, so you or your insurer can pretend the whole thing never happened if either party is unhappy with the outcome.

One disadvantage is that the insurance company's representative will almost certainly be trained for the process, whereas you will be completely unfamiliar with it. Your insurer may also use mediation to determine the strength of your case. You may waste time and money while getting no closer to a solution.

The last resort: File a lawsuit

Suing an insurance company can be a time-consuming and costly process. Try the above-mentioned strategies before filing a lawsuit.

How to dispute a low claim settlement

If your homeowner's insurance company agrees to pay your claim but the settlement offer is insufficient, you have a few options.

Double-check your coverage

Examine your homeowners policy thoroughly, beginning with the declarations page. This is typically where all of your coverage limits and deductibles will be listed. Your settlement offer may be low in some cases because you did not purchase enough insurance.

Assume your house burns down and the cost of rebuilding is estimated to be $300,000 by contractors. If your policy only includes $250,000 in dwelling coverage, your insurer will only pay that amount. (There are some exceptions.) If your policy includes extended or guaranteed replacement cost coverage, your insurer will pay a sum in excess of the dwelling coverage limit to rebuild your home.)

Remember that the first check you receive from your insurance company may not be the only one you receive. If your belongings are insured for replacement cost, your insurer may pay you an amount based on their depreciated value at first. That means you'll get less for each item than you paid for it because its value has declined since you bought it.

However, once you replace the item, you will receive another check to cover the additional cost of purchasing a brand-new replacement.

Here's an illustration. You paid $1,200 for a sofa a few years ago, but your insurance company estimates it was only worth $800 when your house burned down. You would receive an initial settlement of $800 from the company. Then, if you ended up paying $1,500 for a brand-new replacement sofa of comparable quality, the insurer would reimburse the extra $700 after you provided a receipt.

File an appeal

Prepare documents that can help prove your case once you're clear on your coverage and your insurer's position, according to Bach. For example, if your insurance company estimates that repairing your house will cost a certain amount but you believe it will cost more, get a written estimate from an independent contractor.

Explain your case to the insurance company in writing, including estimates, photos, or other documentation to back it up.

Ask for another at-home visit

If there is a disagreement about the extent of damage to your home, you can request that your adjuster inspect it again. Bring any second opinions you've received from independent contractors or other professionals, such as a smoke-contamination investigator or mold inspector, to the meeting with the adjuster.

"Get everyone together in the same room," Bach advises. She claims that determining the full extent of damage is not an exact science. It may help your case if other experts can physically point out damage that your adjuster may have overlooked and discuss potential next steps.

Complain to the state insurance department

If you haven't had success with your appeal, your state's insurance department is another option. When you file a complaint, the agency will investigate the details of your claim to ensure that the insurance company handled it correctly.

Get an appraisal

Appraisal is a method of resolving disagreements between homeowners and insurers about the extent of damage and the cost of repairs. (In most cases, appraisal is not an option for coverage denials.)

Each party chooses an appraiser to represent them. A public adjuster, contractor, or other professional could be involved. According to Bach, lawyers may be involved on both sides. Each party pays its own appraiser, and all other costs are shared equally.

The two appraisers examine the damage to your home and belongings and attempt to reach an agreement on how much you are owed. An umpire, a neutral party chosen by the appraisers, breaks any deadlocks between the appraisers and selects the final award. The decision could be legally binding.

The main disadvantage of appraisal is that it only determines what was damaged and how much that damage is worth, not whether your insurer is required to pay that amount. Appraisal will not resolve disagreements about your coverage, policy language, or other issues that are impeding your claim.

Try mediation

Mediation is another option for resolving disagreements with your insurer. As previously stated, this entails hiring an unbiased professional to assist you and an insurance company representative in reaching an agreement. However, because it is nonbinding, you may be able to walk away with no satisfactory resolution.

In most cases, the cost of a mediator will be split between you and your insurer, or the insurance company will pay the entire amount.

Turn to litigation

When disputing a settlement, as with claim denials, filing a lawsuit is usually your last resort. Because of the time and expense involved, you might not want to pursue this option unless there is a significant difference between the payout offered by your insurer and the one you were hoping for. And you should probably start by exhausting all of the options listed above.

More tips

Everything your insurer and/or claims adjuster tells you should be documented in writing. Keep a record of the dates, who you spoke with, and what was said. Send a follow-up email confirming what you heard if you get information over the phone or in person.

The claim guidance library at United Policyholders includes examples of claim forms and requests. It also includes sample proof-of-loss documents, such as damage reports from independent experts, that can help with your case.