Claiming Water Damage On Homeowners Insurance – Paul West is an experienced private risk advisor with over a decade of experience advising successful families and individuals.
You come home from vacation to find that a small pond has materialized in your basement. Something in the house leaked, overflowed, or exploded. Your first reaction? Panic. Your other:
Claiming Water Damage On Homeowners Insurance
If you’re sure it’s safe to do so, take immediate action to prevent more water from flowing where it shouldn’t. This can mean turning off the main valve in your home (which often requires a key) or an individual water supply valve, also known as a “stop”. Stop valves leading to your dishwasher, toilet, washing machine or ice maker can usually be turned off (clockwise) by hand to stop the water flow. Here’s more on how to close water supply valves.
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Otherwise, it’s a good idea to research water leak detection systems and automatic shutoff valves before disaster strikes. With one small investment, you could prevent serious damage and potentially save money through home insurance discounts.
In 2018, nearly one in four home insurance claims were the result of water damage. From 2014-2016, the number of water damage claims in the US actually surpassed the number of losses caused by wildfires and hurricanes. What do these numbers mean? Water damage is quite common. But not every type of water damage is covered by a typical homeowner’s policy.
As a general rule, water damage is covered by home insurance if it is sudden or accidental. In other words, you couldn’t have predicted it would happen. Water damage is NOT covered when it is the result of non-maintenance/neglect of the home (eg a roof that has not been repaired in 30 years). Flood damage is also NOT covered (unless you have a separate Massachusetts flood insurance policy).
While homeowners insurance covers many water damage scenarios, there are certain situations where your policy may not provide coverage. Knowing these common exceptions can help you better manage and maintain your property to avoid costly repairs. Here are some examples of water damage that is not usually covered by insurance:
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To ensure you have adequate coverage for your specific needs, review your insurance policy and discuss any concerns with your independent insurance agent. By understanding your policy limits, you can take proactive steps to maintain your property and minimize the risk of costly, uncovered water damage situations.
When it comes to water damage, time is of the essence. According to FEMA, mold and mildew can begin to develop 24-48 hours after exposure. So if your pipe bursts on a Friday night, don’t wait until Monday morning to let your agent / insurance company know what’s going on. Most carriers maintain 24/7 hotlines to guide you through the claim process and advise you on clearance.
Clean and dry the area yourself, it makes sense to at least contact a water damage/restoration company. Insurance companies may not recommend a specific water damage company, but they should help you identify several local options to choose from.
NOTE: If your dedicated insurance agent is not available to speak with you at the time the claim arises, please be sure to call during business hours. Why? There is a big difference between insurance
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. Ideally, both of you should know what’s going on in your house. In the event of a complaint, your agent’s job is to act as your advocate and help you secure a timely, satisfactory response from the carrier. Agents can also be valuable in helping negotiate a settlement for any damages (see Step 6) – one of the reasons we recommend working with an independent agent rather than a direct writer or “captive” agent.
A water damage/restoration (VD/RC) company is often needed to pump out any standing water and thoroughly dry all surfaces before moisture or mold can spread. If mold is already present, VD/RC may need to apply special cleaning solutions, after sealing and venting the wet area.
Not all water damage and restoration companies are created equal. Some, unfortunately, may try to take advantage of an emergency situation where you need help quickly. Before signing any contracts or work orders, make sure you get an appraisal and written proof that the company is licensed/insured. Read company reviews online. Ask for referrals from clients in your city or neighborhood.
Note that the VD/RC you choose does not have to be the same company you use to repair walls, floors, joinery, ceilings, cabinets, etc. after the water is gone. Many water damage companies offer contracting services in addition to water and mold remediation, but that doesn’t mean they’re the best choice for your repairs. Again, don’t sign any contracts or agree to additional work without getting a quote… and talking to at least one other contractor. Often the best person to do carpentry, flooring or drywall is someone who specializes in carpentry, flooring or drywall – not a VD/RC.
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In severe cases, water damage can lead to unsafe or unhealthy living conditions in the home. Heavy flooding can drag household chemicals or sewage into the mix – which is not something you should be going through. A risk of electric shock may be present. Even after standing water is gone, mold spores can contaminate the air.
If you suspect any of these issues are at play, ask your agent and your VD/RC team to advise you on the safest course of action. Most insurance policies include coverage for hotel accommodations and even the cost of meals if you are forced to leave. But you’ll want to understand how much (if any) coverage you have for these items, as well as how you’re expected to itemize and itemize these expenses (pay them yourself before you’re reimbursed). If you stay and eat somewhere else, be prepared to save the bills.
Your home restoration team will likely take photos of the damaged area, but you should take your own. (If you later decide to cut ties with this company, you don’t want to chase them for documents.) You should also take photos of any items that need to be cleaned or replaced. With water damage, items that get wet are only part of the loss. Items in drawers or closets where mold has spread should also be professionally cleaned. You may be entitled to reimbursement for these costs.
NOTE: In the event of water damage, most insurance policies do not cover the device that caused the problem in the first place. So, for example, if your ice maker or dishwasher leaks behind your cabinets, your insurance may cover replacing drywall and cabinets, but not a new refrigerator or dishwasher.
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As soon as possible, the insurance company will send an inspector to your home. He or she will assess the damage, photograph and measure it. The repairman will also ask questions about how and when the damage occurred. His goal is twofold. First, he tries to estimate how much it will cost to repair the damage. Second, he seeks to determine whether anyone is guilty.
Do not worry. Unless you intentionally created the problem (eg insurance fraud), your insurance policy is there for you. Insurance is intended for accidents. Even stupid accidents. If you leave a candle burning overnight and your house burns down, you’re still covered – even though it was your fault. The same principle applies to water damage. If you install your own toilet (improperly, accidentally) and water starts falling through your ceiling, you’re still covered.
However, the insurance company has an interest in finding out if someone else is at fault. Say, for example,
Did not properly install that toilet; they say it was a licensed plumber who should have known better. In that case, your adjuster and the insurance company may want to “pass,” meaning they will proceed
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Insurance company for the damage he caused. The same for a faulty device. Your insurance company may try to collect damages from the manufacturer of the washing machine that is not working. This is good news for you, because if they are able to successfully trespass, you may not be able to pay your deductible for the lawsuit.
At some point after his estimate, your adjuster will send a written estimate of what he thinks it should cost to repair your damage. They will probably make a list of labor and materials (drywall, paint, insulating plaster, tiles, etc.). Depending on the size of this claim, he may also issue a check for all or part of this amount, so you can start making repairs. Yay!
Just be prepared; that settlement figure may seem a bit low. Unless your home insurance policy is written to provide “replacement cost value,” your total appraisal is likely based on actual cash value, or ACV. ACV represents what your property is really worth today — not what you paid for it or what it would cost to make it brand new. So, for example, if you spent $20,000 on new cabinets 15 years ago, your loss settlement would reimburse you for $20,000
Here’s a sneaky caveat…in some cases insurance companies will offer what’s called a
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