What do I do if my Insurance Company offers less than I lost?

A common experience for policyholders seeking coverage for their losses, whether you’re a homeowner who has suffered a fire loss or a business looking for commercial property coverage, is for the insurance company to offer you much less than you believe you have lost.  In Massachusetts, every policy that includes fire insurance coverage (i.e., pretty much every property casualty policy in the Commonwealth) has to include a provision to submit your claim to a “reference proceeding.”  M.G.L. ch. 175, § 99. 

A reference proceeding is a form of arbitration where the policyholder and insurance company submit the issue of the amount of the loss to a three-member panel.  The insured picks one referee, the insurance company picks one, and the two referees chosen by the parties pick a third.  The decision of the referees as to the amount of the loss or damage is “conclusive and final.”   Although the policyholder will incur some costs paying their referee and half the charges of the third referee, a reference proceeding is a relatively speedy way to get a binding decision on the amount of the loss.  The policyholder needs to submit a sworn proof of loss and give the insurance company thirty days to respond in order to trigger the right to invoke a reference proceeding.  The policyholder needs to be prepared to prove their loss at the reference proceeding and needs to be aware that any subsequent lawsuit must be filed within two years of the date of loss.  For smaller losses, policyholders may be willing and able to handle a reference proceeding on their own.  But for larger losses, policyholders are well advised to retain legal counsel to represent them.