Insurance: Maximize your benefits

(Money Magazine) -- You can improve the odds that you'll collect the policy benefits you expected, if and when you need them, if you take these steps.

Keep good records. Create an inventory of your possessions to make it easier to document any losses. You can download a home inventory form at the Policyholders of America Web site (Policyholdersofamerica.org) or create your own video inventory by walking through your home, recording each item and narrating pertinent details, such as the cost.

Keep records of remodeling jobs as well as building plans that attest to your home's size and type of construction. Store copies of these records in a repository outside your home (like a safe-deposit box) so they're not lost in a fire or other disaster.

Be frank: If you're applying for an individual health insurance policy, err on the side of providing more info. Spell out any condition for which you've seen a doctor or been treated. If you need more space, attach an explanation.

"Writing a letter about the knee problem that went away five years ago is appropriate," says Maureen Smith, director of consumer relations for Connecticut's Office of the Health Care Advocate.

If the application has only four or five broad questions, offers instant approval or asks for your lifetime medical history (instead of a specific period like 10 years), consider going with a different company.

Read the fine print: Renewing your homeowners policy or buying a new one? Make sure the policy doesn't include special deductibles for wind damage, onerous limits on replacement costs or other expensive restrictions on coverage, advises Robert Hunter, director of insurance for the Consumer Federation of America.

Switching employer health plans or buying an individual policy? Read the plan documents carefully, noting the policy's exclusions and limitations, as well as its appeals process (including deadlines). If the plan won't cover treatment you're likely to need, better to know that up front.

Be a boy (or girl) scout: Before you go in for an expensive health procedure, call your insurer to make sure that it's covered. Get preapprovals and referrals, as required.

Document your calls (jot down the name of the representative, date and time) and keep copies of referrals and other relevant paperwork.

Do your homework: Don't automatically accept an insurer's damage estimate; instead, document the claim yourself.

If, say, a storm has seriously damaged your home, get bids from three qualified local contractors and have them spell out exactly what repairs are needed and what that will cost.

If the insurer's estimate comes in appreciably lower than your own, the estimates will provide you with evidence to help make the case for a higher payout.

Keep your cool: Getting angry with an adjuster or other insurance rep rarely helps your case and could hurt it.

"It might make you feel better, but if you get angry, more than likely your file is going to the bottom of the pile," says Susan Dressler, owner of Health Claim Assistance, who spent 17 years working in the claims department of several insurers.

Instead, get the name and phone extension of anyone helping with your claim and make him your ally.

Don't take no for an answer: If you're turned down for a higher payout or your claim is denied altogether, appeal. Relatively few policyholders challenge coverage decisions, but those who do are often successful. Studies show that nearly half of appeals are decided in favor of the consumer.

Get help: Still can't get any satisfaction? Ask your state regulator and department of insurance for help. Bear in mind, though, that insurance commissioners in some states are decidedly more useful than in others.

Find other state health-care advocates at familiesusa.org (click on Consumer Assistance Program Locator). For problems with health coverage, a claims assistance professional can also fight on your behalf (find one at claims.org). Fees range from $30 to $160 an hour.

Weigh your last resorts: So you've exhausted your appeals to no avail. What to do? Sure, you could hire a lawyer and sue. But because of the cost involved, a lawsuit usually doesn't make sense unless you have a very large claim or the insurer's actions are so egregious you might get punitive damages. Lawsuits can also drag out for years.

A better bet for homeowner claims: Invoke the appraisal clause that's part of most policies, allowing you and the insurer to both hire appraisers who try to agree on a binding settlement. If they can't come to terms, an umpire chosen by the appraisers or a judge will arrive at a figure.

Preparing to file a claim? Concerned you're not getting the full benefit you're owed? Check out these online tools and tips.

Families USA (familiesusa.org): Find state agencies that help with health insurance issues.

Georgetown University Health Policy Institute (healthinsuranceinfo.net): Go here for state-by-state guides that spell out your rights as a policyholder.

National Association of Insurance Commissioners (naic.org): Get direct links to state insurance departments.

Policyholders of America (policyholdersofamerica.org): Download home inventory forms and get help crafting effective complaint letters.

United Policyholders (unitedpolicyholders.org): Go to Claims Tips for advice about the best techniques for filing claims and resolving disputes quickly and fairly.