Questions to ask when filing a water damage insurance claim

Are you filing an insurance claim with your home for the first time? These ​three key questions when filing an insurance claim will help you understand the core principles and navigate the process. These are written from the experience of an restoration professional with nearly 20 years assisting property owner’s recover from water and fire related damages.

As a homeowner, you want to make sounds decisions based upon information gathered from trusted professionals combined with your own experiences. Having the knowledge base to make a smart decision is key when you are attempting to maintain value, address current issues, and keep a long term perspective.

The insurance process can be cumbersome at times as it seems to be riddled with red tape and key words that seem to be written to trap policy holders into the nebulous world of rejected claims. If you find yourself in what is considered a "doubtful and/or disputed claim" our friend David Princeton of Advocate Claim Service (who was on The DYOJO Podcast Episode 1 and Episode 32) can assist you. On Episode 32, David shares a few additional questions that will help homeowners from getting taken advantage of. 

Our three key questions when considering an insurance claim will assist you to make decisions on how to proceed with your next property damage loss. We will primarily discuss water damages in the following scenarios as these make up some of the most common homeowner related insurance claims are water related. Eight years of data from Travelers Insurance revealed that water related events accounted for 31 percent of its claims.

Claims Question #1 — Is this a covered loss or peril?

The number one question with a property insurance claim is whether or not it is a "covered peril." Another way to think of this is whether the source of the loss/peril is specifically excluded in your insurance policy. Most plumbing related water sources are included by standard policies which often cover plumbing leaks, pipe breaks, overflows, and the like.

According to the website Policy Genius, "In homeowners insurance, a “covered peril” is an event the insurance company agrees to reimburse you for should you file a claim. Covered perils include fire, lightning strikes, windstorms and hail, weight of snow and ice, theft, and vandalism."

• A scenario where a water heater has rusted out at it's base because of age or lack of maintenance could be a source for coverage concern.
• Seepage from ground water or flooding from a catastrophic event could be a source for rejection and/or concern if you do not have additional coverage for these items.

Talk to your insurance agent and make sure you understand the fine print of what is and what is not covered in your homeowners insurance policy.

• Is this source/peril covered under my policy?
• If the answer is yes, proceed to Question 2.

Claims Question #2 — Was this sudden and accidental?

A common loss that is typically covered would be a scenario where the homeowner, or a tenant, returns home and finds that a plumbing line has burst and water is streaming through the structure right out the front door. Interior plumbing breaks are most often covered and the loss classifies as sudden and accidental, most likely this would be a covered loss.

Andrew McCabe, of Claims Delegates, who is a licensed public adjuster as well as a restoration professional, shares nine power questions to help homeowners navigate the claims process:

1. Is my claim covered?
2. What if my loss exceeds my policy limits?
3. Are there any exclusions in my policy which apply to this claim?
4. Will your company pay all the costs I incur to put my home back the way it was?
5. Can I choose the contractor to perform the needed repairs to my home?
6. Is there anything you can tell me that will help to settle this claim?
7. When can I expect the first check (and how much will that be?)
8. What if that check is not enough to complete repairs.
9. ARE YOU AUTHORIZED TO SETTLE MY CLAIM?

Mr. McCabe discusses these questions further with Bryan Close and Jon Isaacson on The DYOJO Podcast Episode 37. Water damage from a likely covered peril can become a bit of a grey area when there is a small leak that has caused damage over an extended period of time. Indicators such as extensive discoloration, microbial growth (the four letter word — mold), and/or dry rot could be a source for concern.

A refrigerator supply line leaking behind the appliance may not be noticed by a homeowner or a tenant until there is significant damage to the structure and flooring. While the extent of the damages were not exacerbated by the tenant or homeowner being negligent (they did not know about the loss), the evidence will show that the damages have been occurring outside of what would be considered “sudden and accidental.”

During the claims process the stakeholders will need to work to determine the source of the damage as well as the estimated duration of the loss.

• Is the loss sudden and accidental?
• If the answer is yes, proceed to Question 3.

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Claims Question #3 — What is my deductible?

Most homeowner deductibles are $500 — $1,000 with many carriers transitioning to a 1% of value related policy (which can be much more than $1,000 on modern homes). An insurance deductible is the amount you as a policy holder have agreed to pay out of pocket in the instance that you file a claim.

A water damage loss that is approved by the carrier as a covered claim (peril) will encompass two parts:

• First, the mitigation portion which will include the assessment of the extent of damages, removal of affected materials and utilization of drying equipment.
• Second, the repairs portion which will include restoring the affected areas to their pre-loss conditions with materials of like kind and quality.

Even if the loss is from a covered peril, and was confirmed as sudden and accidental, understanding the extent of the damages and the estimated cost are factors in determining whether it is in the insured’s best interest to file a claim. Identifying the extent of damages and the estimated cost for mitigation (drying out the structure) and repairs are important considerations in making decision whether or not to move forward with the property insurance claims process.

Restoration Contractors will often provide a free evaluation of your home. By using non-penetrating and/or penetrating moisture meters, thermal cameras, and their experiences, a good water damage specialist can assist you to identify the extent of a water damage in your home and provide you with a rough order of magnitude (ROM) for the scope of work. 

Many of the same principles we wrote about in hiring the right abatement contractor apply when interviewing restoration contractors. In life we don’t always need to know the answer to every question, but knowing what questions to ask and who can help us find answers are critical tools for survival. Your home is a source of pride for you as an owner. You want to protect your asset by surrounding yourself with the information you need to make smart decisions. 

If you need a recommendation, The DYOJO network may be able to assist. Our friends at All American Restoration Services (AARES) have been helping families in the Tacoma, Washington area repair their water or fire damaged homes for several years and have been a good friend to our podcast.