Most Americans buy insurance hoping never to use it. But when their cars are wrecked or their homes are burglarized, they expect their policies to cover the loss.

What happens if the insurance company refuses your claim, or it offers a sum far lower than the actual damage? In nine of 10 cases, people do nothing, although they can win if they employ the right tactics, said insurance litigation expert William M. Shernoff."They figure there is no use in fighting this $200 billion industry," said Shernoff, the author of the book Payment Refused (Richardson & Steirman). "And that's a shame, because policyholders have strong rights under the law."

Insurance experts say that consumers' failure to substantiate their losses is the main reason why they are refused or shortchanged on claims. Many homeowners find it difficult to accurately determine the value of stolen items or wrecked property because they don't keep accurate rec-ords.

Sometimes claimants underestimate the damage. Immediately after the event, in the rush to file a claim, it is not uncommon for a homeowner, for example, to value a $25,000 loss at only $10,000, insurance experts say.

Later, when a homeowner gets professional estimates for repair or replacement, he may learn his own valuation was too low. But he loses credibility if he tries to raise the estimate, and the insurance company could refuse to pay the higher claim.

On the other hand, says Shernoff, purposely overestimating or inflating a claim will annoy the claims adjuster and render payment more difficult.

"At worst, it could make you vulnerable to a criminal charge of fraud," he said. "An honest claim lays the foundation for future action, should the company refuse to settle."

One way to help determine the value of a loss and speed settlement of a claim is to provide the insurance company with a photographic record of your possessions. This is essential in establishing the value of antiques and family heirlooms.

But what can you do if an insurance company refuses to pay a lawful claim anyway? Shernoff says consumers should understand and use the following tactics:

Put it in writing. Request a written explanation of why your claim was denied. Most states require the company to provide you with this. If the explanation cites some technicality, such as failure to file on time, the company is probably out of line. Even if you are months late in filing, your claim is still valid unless the company can show that its investigation was harmed by the delay.

Beware of the corporate shuffle. Insurance firms are no friendlier than other corporations. The fewer claims they pay, the greater their profit. They can be highly subjective and sometimes ridiculous in interpreting a policy's language.

"Because the company is responsible for the language of the policy, any ambiguity or fuzziness will work in favor of the policyholder" if it comes down to a lawsuit, said Robert Hunter, president of the National Insurance Consumer Organization in Alexandria, Va. "Court decisions are most often guided by the 'reasonable expectation' of the policy holder."

Also, don't be intimidated by fine print. If your claim was denied because of a fine-print "exclusion," take heart. Most courts have ruled that the company must prove that such exclusions were phrased clearly, plainly and conspicuously.

Don't get shortchanged on personal injury claims. Ask for a breakdown of medical expenses, lost earnings, and pain and suffering when the company offers a personal-injury award. Then, Shernoff says, apply the "rule of three," which often is a good test of whether you're getting a fair shake.

That means that if your medical bills and lost salary total $10,000, multiply the total by three to calculate the value of your pain and suffering. Your total settlement should equal the amount of the bills and lost salary, plus pain and suffering, or $40,000. If the company offers much less, press for a fairer settlement, and prepare for a battle.

Ask your insurance agent to intervene for you. "Insurance agents want to see valid claims paid, if only to keep their customers happy. A nudge to the home office may help grease the wheels," Shernoff said.

However, even if your agent is honest he may have little influence over some distant adjusters. If you're still not satisfied, take your case to the insurance company's top brass first by telephone, then by mail.

The company may decide to pay your claim after hearing your side of the story. "But if the firm fails to respond to two letters, write a third letter that says you will start legal action within 30 days," Shernoff said.

Given the size of some recent court awards, this can work wonders. While you wait, keep a log and a copy of all communications.

Contact your state's department of insurance. In some states, you might get somewhere by doing this, because these departments can be helpful consumer advocates. In others, though, they are understaffed or heavily influenced by insurance industry interests. In either case, state agencies do not have the authority to force a company to settle.

Take the company to small claims court. You can represent yourself, and you will get quick results. However, this solution will work only for claims of $1,500 or less, the limit of most small claims courts.

If all else fails, hire a lawyer. To find someone experienced in this area of the law, contact your state or local trial lawyers' association or a consumer-advocate group.

Many attorneys will take insurance-claims cases on a contingency basis. That is, if you win your case, the lawyer keeps a portion of the award, usually one-third. If you lose, you pay nothing.

About 95 percent of insurance suits are eventually settled out of court. But extreme cases in which a policyholder's attorney can demonstrate "bad faith" by the insurance company can result in huge punitive awards.

Reader questions will be answered and may appear in this column, when mailed to Gary S. Meyers at 308 W. Erie, Suite 300, Chicago, IL 60610