Reasonable and Customary Fees

Glossary

In many renters insurance policies, your service agreement or contract will contain a special area devoted to “Reasonable and Customary Fees” or “Reasonable, Usual, and Customary Charges.” These fees or charges refer to the cost of a specified insurance claim within a certain geographical area. In other words, a renters insurance company’s reasonable and customary fees define exactly how much they’ll cover for a specific home repair or replacement. For example, if in the case that a minor fire caused some damage to your apartment, your insurer’s reasonable and customary fees would decide exactly how much of the damage they would pay for. In most cases, your insurer will cover all of the damage. However, there are situations where the company’s reasonable and customary fees don’t match up with the amount it would take to cover the damage. In this situation, it’s up to you as the apartment renter or owner to cover the rest of the damage out of your own pocket.

How is “Reasonable” Determined?

One of the most common questions that renters have about their company’s reasonable and customary fees is concerning how exactly they get determined. After all, if you have to pay for something you thought was covered under your insurance policy, you’d probably want to know why. Generally, insurers come up with their reasonable and customary fee amounts by researching the area around you. They’ll find out how much similar damage should cost to repair or replace and how much other insurance companies are typically paying out for it. Some companies use extensive national research to come up with their fees. If your claim is higher, you could get stuck paying for the rest of the bill. Naturally, many consumers have a problem with these standards, as there’s little getting in the way of an insurer simply making their customary fees extraordinarily low. The insurance industry does not regulate reasonable and customary fees either, making them all the more difficult to accept.

Avoiding Unreasonable Fees

No one wants to have to pay out of pocket because their insurer will only cover a certain amount of a claim. Fortunately, there are some steps you can take to avoid these issues. In the case that you feel you’re paying more than you should for an insurer’s reasonable and customary fees, check out these tips:

• Before allowing someone to begin repairs on your apartment or start replacing items, find out how much it will cost. Once you know the charge, you can contact your insurer to make sure it falls under their reasonable and customary fees. If not, you might want to try getting some other quotes for the claim.
• If you can’t find anyone else to work on your apartment at your insurer’s reasonable and customary fees rate, try contacting other insurance providers in your area. Find out if their reasonable and customary fees are more in line with the price you’re being quoted. If they are, you should let your insurer know of the discrepancy and ask that they meet the fees set forth by other providers.