Insurance Coverage for Water Damage
The weather is throwing everything it can at you this season, and varying temperatures can cause pipes to freeze and burst. A busted pipe is just one of the few common causes of water damage. If it’s not frozen pipes, it’s a supply line leak, clogged pipes, or a malfunctioning washing machine. According to the Insurance Information Institute, 1 in 60 insured homes filed a water damage claim from 2016 to 2020. Those numbers could be much higher with all the weather-related flooding occurring throughout the country.
Note: Flood damage is only covered through separate policies, and the number of homes that needed it and should have had it didn’t have the required endorsements to receive help from their insurance policies.
This article will cover the twelve steps you need to take to ensure your insurance pays for your water damage. Hopefully, you’re reading this article before you face water damage because preparation is always the first step in this process. Know your policy, cover all the bases, and know you have sufficient coverage for unexpected water damage.
Table Of Contents:
- Step 1: Inspect your home regularly
- Step 2: Quickly access the source of the water
- Step 3: Do what you can to stop the flow
- Step 4: Safeguard undamaged items
- Step 5: Record the damage
- Step 6: Call your insurance agent
- Step 7: Learn the actual cost and replacement cost
- Step 8: Hire a professional water damage cleanup company
- Step 9: Consider Hiring A Public Adjustor
- Step 10: Document your claims
- Step 11: Negotiate settlement
Step 1: Inspect Your Home Regularly
Regular inspections can save you money. They can also determine whether your insurance policy covers the damage. Some coverage might be obvious, but when it comes to homeowners' policy of only covering damage from “sudden and accidental” flooding, keeping an eye on your property makes good sense.
Spotting a leak, noticing drywall damage, or ceiling damage early on can keep the damage in an “accidental and sudden occurrence” category. If it goes unnoticed for some time, then the responsibility of payment might fall back on you, the homeowner. Insurance companies are ruthless, so the real win here isn’t getting them to pay for water damage, but avoiding it in the first place.
Step 2: Quickly Access the Source of the Water
Before entering your home or a flooded area, it's important to assess the risk of the water and the damaged area before proceeding. Certain types of water can contain harmful, if not deadly bacteria and other nasty materials you don’t want to come in contact with.
Source possibilities may include:
- Storm surge
- Sewer backups
- Clogged drains
- Overflowing tubs or sinks
Before wading into the water, understand the three categories of water damage and how they’ll affect your next actions.
Three Categories of Water Damage
- Category 1: Category 1 water damage comes from a clean water source, possibly a broken potable supply line. Another source of Category 1 is rainwater or an overflowing bathtub or sink that contains no significant and immediate health hazards.
- Category 2: Category 2 water damage comes from a non-potable source, such as gray water, that may contain bacteria from organic and inorganic materials and potentially toxic pathogens. An example would be a fish tank, a clogged toilet, or a washing machine.
- Category 3: Category 3 water damage contains dangerous solid or liquid material from a black water source. This category comes from septic tank backup, sewage, flood water, and other contaminated ground surface waters.
Step 3: Stop the Flow
Once you have accessed the water source, you can close any valves if potable water is the source. If there is the possibility of a shock hazard, it is best to contact the electric company and have the power shut off first.
Step 4: Safeguard Undamaged Items
You will have to make some judgment calls between this step and the next. If the flood water hasn’t fully permeated or covered some of your valuables, you will need to get them to safety. They will likely need to be moved before any remediation work begins.
Depending on the water level, most things on the floor need to be dried out as soon as possible and decontaminated if necessary. It would be advisable to add these items to your recordings and pictures. You can include them in your insurance claim if they are damaged or irreparably damaged.
Step 5: Record the Damage
Photo documenting and video documenting will help supply evidence if any unaccounted-for water damage is claimed. Record and document any items damaged, destroyed, or have come in contact with water from the flood.
Document the date, time, and location of the damage. Take down any serial numbers on damaged items and take samples of carpets and paddings, upholstery, wallpaper, and all materials affected by the water damage. This will help show the grade or quality of the damaged materials.
Step 6: Call your Insurance Agent
The next step will be to call your insurance company and begin the process. Always call your agent before hiring a water damage restoration company since your policy may cover the cleanup service.
Your agent will send an adjuster out to your home to assess the damage, take photos and measurements, and ask questions about how the damage occurred. They’ll compile all their data to come up with a number for the final settlement offer. Know that insurance adjustors are not your friends. They will prioritize saving their insurance company as much money as possible over your wishes.
| Important Tip: What you say is important with water damage claims. Within reason, if they ask you when the damage took place, use verbiage like “now, recently, gushing abrupt, sudden, unexpected, and accidentally.” Keep it simple! You don’t need to explain every detail. It’s better to say, “I don’t know, it’s a lot of water.” Never apologize or admit any wrongdoing.
Step 7: Learn The Actual Cost And Replacement Cost
Knowing the difference between the actual cost and replacement cost can save you from a terrible shock when you receive a settlement figure from your insurance. The difference is that the Actual Cost Value (ACV) will account for the depreciation of the item claimed, while the Replacement Cost is what it would cost to replace the listed item.
So, for instance, if you paid $2000 for a sofa set 15 years ago, the ACV would consider the depreciation percentage and the years you owned it, and reimburse you for that value instead of the price you paid. Understanding the language of your policy about depreciating values and replacement cost is essential. Understand these values because you’ll likely pay out of pocket first to replace items, then receive a reimbursement from your insurance provider. There are several depreciation guides to help you understand the values and depreciation percentages as well as the “useful years” of a claimed item.
Key Takeaway: Yes, it’s a hassle to manage an itemized list of everything of value in your home. Keeping serial numbers, dates purchased, and receipts will go a long way in proving the value of the items you claim.
Step 8: Hire a Water-Damage Clean-up Company
By step eight, you’re overwhelmed. Luckily, you don’t have to clean up the water damage yourself. Your insurance company will recommend a water damage restoration company to you. Know that you don’t have to use the company they recommend. Your preferred choice should be a company that you’re comfortable working with and can start cleanup and restoration ASAP. You want to work with a water damage restoration company that has a process for working insurance jobs. Good water damage technicians don’t just remove and restore, they also document thoroughly for insurance claims. Lastly, they should have a way to bill insurance companies directly.
Step 9: Consider Hiring A Public Adjustor
The benefit of using a public claims professional is that they will look out for your best interests. An insurance company hires an independent claims adjuster to try and save the insurance company as much as possible. The public claims adjuster you hire will work for you. They want to save you out-of-pocket money and help you get a better settlement.
Step 10: Document Your Claims
Documenting claims is a great way to ensure you can get the insurance company to pay you for water damage. Keeping a running log of claims and actions will help when you ask the insurance company to honor your policy.
Things you should be recording in your homeowner's insurance logbook:
- Dates and times of leaks discovered
- Names of witnesses to the leak
- Plumbers' names and contact information
- Any other inspectors who have been on your property
- Service providers who have done any kind of work on your property
- Maintain a call log between you and you insurance agent as well as your claims adjuster regarding a claim
Keep all the receipts, repair invoices, estimate documents and any form of paperwork regarding a particular claim.
After filing the claim, you will have to cooperate with the claims adjuster and the insurance companies and allow them to make periodic inspections of anything concerning the claim. These are “reasonable requests” that you will be obligated to comply with relating to any necessary investigations.
Step 11: Negotiate the Settlement
To ensure the contractor you decided on and your claims adjuster are on the same page will probably take a bit of negotiating. If this is something you feel you can do yourself, this might be an excellent opportunity to come out of pocket and upgrade a few things along with the settlement money you receive from your policy. Additions will take some negotiating with the insurance adjuster.
The adjuster will have in mind materials and fixtures that will align with the adjusted settlement price. In contrast, you may have a few more renovation ideas that you would like to take this opportunity to do some home upgrades. Be upfront with the adjuster and try and work out a mutual agreement to where both parties will achieve their goals. If this sounds like something that will be too overwhelming and take up too much of your time, having your independent agent work with the adjusters and the contractors might be the solution.
What To Do If Insurance Won’t Pay
After all that you had to do and all the hoops you jumped through, now the insurance company says they won’t pay your claims. What do you do? First, you have the right to know why they denied your claims. Your rights don’t end there. You have the right to file an appeal, and from there, that calls for a review of your case. Your insurance has to send you a detailed account of why they denied your claims. If you have a legitimate cause to believe there has been a mistake, you need to call the adjuster immediately and start your appeal.
Five Types Of Water Damage Not Covered By Base Policies
There are five types of water damage causes that are generally not covered by your homeowner's policy:
- Frozen pipes that burst due to an unheated home
- Gradual water damage
- Water damage caused by neglected maintenance issues
- Sump pumps and sewer backups
- Groundwater flooding
These types of water require extra coverage endorsements that you can add to your existing policy for an additional premium.
Extra Coverage For Water Damage
Your homeowner's policy will only cover water damage that is considered sudden or accidental. Your normal policy won’t cover anything outside of that scope. That's why you should look into extra coverage endorsements that you can add to your existing policy to fill those potential costly gaps in your coverage. Sewer backups, sump pump backups, floods, and seepage generally aren’t covered by homeowners’ insurance policies.
Hire Spaulding Decon To Fix Your Water Damage
When dealing with insurance companies, you will speak with many people who aren’t on your side during this process. It’s refreshing to know that we will act in your best interest when you pick up the phone and call Spaulding Decon. We know how to work with insurance companies and clients to satisfy every party. Call Spaulding Decon immediately to get a water damage restoration estimate.