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Beware of Improper Insurance Claim Denials for Water Damage
Many homeowners pay their insurance premiums for years thinking they are adequately insured against events such as water damage. When they do eventually file a claim for water damage, they are shocked and angry when their insurance company denies the claim.
In most cases, the insurance company might be within its rights to deny the claim based on the wording of the policy. Many homeowners either don’t read or understand their policy and don’t know what it will or won’t cover.
However, improper insurance claim denials for water damage are on the increase as insurers look for ways to cut costs at the expense of homeowners.
According to statistics, about one in 50 insured homes has a property damage claim caused by water damage or freezing each year. And the average cost of damages exceeds $10,000 per claim.
An Insurance Adjuster Is Not Your Friend
When you file an insurance claim, your insurance company will appoint an adjuster to manage the claim for and on their behalf. This adjuster looks after the best interests of your insurance company, not your best interests.
Insurance companies will typically pay out the minimum amount they think they can get away with.
It’s normal that insurance companies, like many other businesses, want to cut costs where possible. However, improper insurance claim denials are unacceptable.
What’s an Improper Insurance Claim Denial?
When you take out a homeowners insurance policy, you enter into a contract with your insurer. You agree to pay an insurance premium, and in exchange, your insurance company agrees to provide coverage for damages caused by certain events.
If your insurance company denies your claim for invalid reasons, they are acting in an improper manner and in bad faith. They are in effect breaching the terms of your contract.
Most insurance companies are clever enough not to deny a claim for a reason that’s obviously invalid. Instead, they hide behind the fine print. They interpret ambiguous clauses in their favor and refer to clauses that often lack clarity or details.
As per the old idiom, “the devil is in the details” – which in the case of insurance policies can be found in the fine print.
Water damage disputes typically arise over whether it was caused by a “sudden and accidental” event or by “constant or repeated seepage or leakage of water or steam over a period of weeks, months, years.”
Note: Some insurers have replaced the wording “over a period of weeks, months, years” with “over a period of time greater than 14 days.”
Insurance companies typically require water damage to be caused by a “sudden and accidental” event. Many homeowners insurance policies contain exclusions for water damage claims that are not immediately identified.
What if you’re away on holiday or visible signs of water damage remain hidden for a period of time after the occurrence of a covered water damage event? Many insurance companies had foreseen this scenario and added wording to their insurance policies to protect their interests, such as:
“We do not cover any water, or the presence of water, over a period of time from any constant or repeating gradual or slow seepage, leakage, trickle, collection, infiltration or overflow of water from any source… whether known or unknown to any insured.”
Based on the above clause, it doesn’t matter when you discover the water damage. The only thing that matters is when the event leading to the water damage occurred.
Homeowners insurance is supposed to provide a homeowner with coverage, unless the cause of the loss is excluded. By imposing temporal requirements on coverage, insurance companies undermine the purpose of insurance, which is to provide coverage to homeowners for covered events.
By linking covered events to temporal exclusions or time limitations, insurance companies have created another problem, namely how do you determine when an insured event took place?
Proving Temporal Exclusions
The first thing most homeowners do when they notice water damage is to call their insurance company. Your insurer will typically send out a plumber that is on their “approved vendor” list to evaluate the cause of the damage.
The plumber will provide the insurance adjuster with a report of their findings that often include, on request, their opinion of how long ago the event that caused the water damage occurred.
The inspection services of the plumber are paid for by your insurance company. Service providers such as plumbers often count on getting repeat business from insurance companies.
Since insurance adjusters act in the best interests of insurance companies, it’s conceivable that most plumbers will follow suit.
Many homeowners will accept the opinion of an “expert” that was sent to their house by their insurance company. Most won’t even think about hiring their own “expert” to get a second opinion. And as time passes it becomes more difficult to determine the duration of a leak.
It’s worrisome that in many cases the outcome of a covered water damage claim might ride on the opinion of an “expert” appointed by your insurance company.
Many homeowners don’t know the details of what their insurance company will or won’t cover.
The first step is to familiarize yourself with the contents of your homeowners insurance policy. Most homeowners insurance policies cover water damage, but that doesn’t mean all possible causes of water damage are covered.
Covered water damage claims include the following causes:
- Burst pipes.
- Wind, rain, and hail.
- Water used to extinguish a fire.
Water damage is typically excluded for the following causes:
- Water that seeps in through the foundation.
- Lack of maintenance, like a leaking old roof.
- Water that backs up from sewers or drains.
Note: It’s often possible to get additional insurance, such as flood insurance, for events that are typically excluded from a standard homeowners insurance policy.
If you have any questions about covered events and exclusions, call your insurance company and ask them to confirm what they tell you in writing.
As discussed in this article, many insurance companies have temporal or time exclusions for covered water damage claims. This, together with how they use “experts” to determine when a covered event occurred is controversial. It can lead to improper insurance claim denials for water damage.
For large or complex water damage claims, we highly recommend you consult a public adjuster. Unlike an insurance adjuster who acts in the best interests of your insurance company, a public adjuster acts in YOUR best interest.
Avner Gat, Inc. has over 17 years of experience as a public adjuster in Southern California. We protect homeowners from the games and fine print that insurance companies are known for.
Call us at (818) 917-5256 to find out how we can help you manage your homeowners insurance claim.