One in 50 insured homes experiences water damage every year. Plumbing leaks from burst or broken pipes are one of the most common causes of water damage. As a homeowner, chances are high that you will eventually find yourself dealing with a plumbing leak at least once in your lifetime.
Chances are even higher that your homeowner’s insurance company will deny or underpay your insurance claim. Insurance companies make money by denying and underpaying insurance claims. However, there are certain things you can do to protect yourself from having your insurance company deny or underpay your claim.
What’s an Insurance Policy?
Your policy is the contract between you and the insurance company. It sets forth the insurance company’s obligations to you (the policyholder). The policy also sets forth the duties you must comply with if you have a loss. Unfortunately, many insurance companies will take any opportunity to deny your claim for non-compliance with your duties under the policy.
Your policy will not cover every kind of loss or every kind of plumbing leak. Some policies have endorsements that exclude coverage for water losses or they limit the amount that will be paid on a water claim. Any limitations of coverage are legally required to be detailed in your insurance policy.
Inspect Your Home Regularly
Homeowner’s insurance policies generally cover “sudden and accidental” water losses. While insurance companies do not often challenge policyholders on whether a water loss was “accidental,” they routinely question whether water losses were “sudden” or if the loss was occurring “over a period of time.” Many policies do not cover long-term water damage even if the water damage was hidden from your view.
Every homeowner should perform periodic inspections of their home. Focus on areas where plumbing lines are concentrated such as the bathrooms, kitchen, and laundry room. Check under sinks and toilets for slow leaks that may otherwise go unnoticed. Check your air conditioner closet to make sure the condensate drain line is not clogged. Look behind your refrigerator if it has a water line. These inspections will allow you to reasonably narrow down the timing of any discovered leaks.
Act Quickly After Discovering a Leak
Time is of the essence if you find an active plumbing leak (even a small one). Homeowner’s policies normally require policy owners to “protect the property from further damage” and “to make reasonable and necessary repairs to protect the property.” In other words, you must stop the leak from damaging your home. However, it is also normal for homeowner’s policies to require policyholders to “show the damaged property,” meaning you also have an obligation to preserve the “damaged property” for inspections by the insurance company.
Is that confusing? Some might say it is intended to be. On many occasions, insurance companies have taken the position that a policyholder’s attempts to “protect the policy from further damage” and “make reasonable and necessary repairs” prevented the “damaged property” from being shown. As soon as you identify a leak, take the time to document it through photographs and video. Photograph it from more than just one angle. Take a short video of the leak. Try to capture as much detail as possible as you may need this evidence for any disputes with your
insurance company. Next, shut off the water flow to the affected plumbing line. If you cannot identify where the leak is, or if there is not an indoor valve allowing you to shut off water to the broken plumbing line, shut off the main water valve. The main shut-off is traditionally on the outside of your home. If the leak is coming from a drain line, stop using the plumbing systems attached to that drain line.
You should always take photos and videos of any efforts you make to clean up the water and mitigate the conditions at the property. If water has pooled on the floor, take photos and videos of it. Once that is done, clean it up to prevent the water from damaging anything that has not already been damaged.
Your next step is to call a plumber. If possible, have the plumber stop the leak. The plumber should provide you with a receipt for any repairs made. If any plumbing components are removed during the repair, have the plumber give them to you. Do not throw away any plumbing components as your insurance company may ask to inspect them. After the plumber stops the leak, take photos and video of the area where the repairs were performed. If no plumbing repairs are made for any reason (e.g., the leak could not be located), ask the plumber for an inspection report or receipt with a description of the services provided.
If the plumber cannot locate the leak, you may wish to contact a leak detection company. If the leak detection company is not available for a same-day inspection, keep the water shut off or do not use the system until the leak is identified.
Report the Loss Quickly
Homeowner’s insurance policies require losses to be timely reported. Most policies require the insured to “promptly” report the loss and damage. Some policies require the reporting of a claim within a specific time frame (e.g. within 72 hours of the loss). Always try to report a plumbing leak as soon as possible. The longer you wait to make a claim, the more likely it is for your insurance company to argue it was not timely reported.
The most common way to report a loss is by calling your insurance company’s 24-hour claim reporting call center. However, many insurance companies also have an online portal that allows for the reporting of a claim. Always keep a log detailing when you reported the claim, how you reported it, who you spoke to, and the assigned claim number.
When reporting the claim, advise the insurance company if the plumber was unable to locate or fix the leak or if your water is still shut off. Reporting these issues may help you get a quicker response from the insurance company.
Providing a Date of Loss
When reporting the claim to your insurance company, you will be asked when the leak occurred and when you noticed damages. Your answers to these questions can have a lasting impact on your claim. Most insurance policies do not provide coverage for leaks that occur over a period of time or for more than 14 days—even when hidden from view.
One of the main reasons the insurance company asks you to provide a date of loss is to determine whether, based on your own answers, there may be a basis to deny your claim from the start of the claims process. Water loss claims get very complicated when leaks are not obvious and are hidden from view. Avoid identifying a date range when asked for a date of loss. It is especially dangerous to identify a date range when your coverage is recent or the leak may have been occurring for a period of time. If you do not know the exact date the leak began, then advise of the date that you found the damages. The use of experts and claims professionals can assist the claims presentation process and can help avoid claim denials based on the date of loss issues.
Documenting your Claim
Insurance policies require policyholders to keep and maintain claim documentation. Keeping a written activity log of claim events and actions will help protect you if your insurance company does not honor its policy obligations. Some of the first entries on your activity log should be the date and time you discovered the leak, the names of any persons who saw the leak or the damages, the plumber’s name and contact information, as well as the name and contact information for any other service providers that inspected your insured property as a result of the loss. You should also log all communications with your insurance company and its adjusters regarding the claim.
Additionally, you should ask for and keep receipts for all work performed at your home. Avoid working with service providers that refuse (or are reluctant to) provide receipts or documentation for work performed. You may run into service providers who offer discounts if you pay in cash and do not require a receipt. You do not want to work with these service providers within the context of an insurance claim.
While your claim is pending many documents will be exchanged between you and the insurance company. You will receive letters and notices from your insurance company. You will get repair estimates, invoices, and receipts from service providers. You may hire a public adjuster or attorney and have correspondence with them regarding your claim. Keep copies of all of these documents for future reference.
Cooperating with Reasonable Requests
Soon after you report your claim, your insurance company will begin requesting you to provide access to the property and claim documentation. Complying with these requests is important as the policy requires you to comply. Most homeowner’s policies include language requiring policyholders to “cooperate […] in the investigation of the claim.” Similarly, policies usually require policyholders to comply with certain “post-loss obligations,” like “show[ing] the damaged property” and “provid[ing] records and documents.” Your claim can be denied if you do not comply with reasonable requests.
Customarily, within a day or two of reporting the claim, a desk adjuster from the insurance company (or a third-party claim administrator) will contact you to start work on your claim. They may ask you a few questions about the claim and ask to schedule an inspection of your home. If the desk adjuster does not attempt to schedule an inspection, ask when the inspection of your home can occur. You want the loss to be inspected as soon as possible to keep the claims process moving. If the plumber was not able to fix the leak or your water is still shut off, tell the adjuster and ask that they provide you with alternative living arrangements. Your insurance company will also send a field adjuster to inspect the damages on its behalf. Be sure to ask for a business card from the adjuster or contractor who inspects the property to keep for your records.
Be sure to get the desk adjuster’s email address during your first conversation with the adjuster. Use this email address to send all claims documentation and communications. Likewise, respond to the insurance company’s requests in writing even if it is only to say you do not have the documents or information being requested. Do not rely on your insurance company to keep an accurate log of all conversations. The insurance company may not accurately record everything that was verbally conveyed to it during the claim process. Using email to communicate will ensure an accurate and complete record of your communications with the insurance company (and of your compliance and cooperation during the claim adjustment).
Using Claims Professionals
You may not always get the coverage you paid for despite the promises your insurance company made when it sold you the insurance policy. Consider hiring a claim professional to help you get a full and fair settlement for your water damage claim. Your insurance company has a large team of adjustors, experts, lawyers, and claims professionals protecting its interests. You should consider hiring your own claim professional to protect your interests in the claim.
Studies show that when insureds hire their own claims professionals, their claims are denied with less frequency and the insureds recover significantly more insurance benefits then those without professional representation. Do not rely upon your insurance company to protect your interest in your water loss claim. Hire a claims professional who will answer to you—not the insurance company.
We Can Help You Get the Most Out of Your Claim
As a claim professional, we will help prevent your water damage claim from being set up for a denial of coverage by your insurance company. We can explain the terms and conditions of your insurance policy and can assist in properly investigating and documenting your damages.
Your insurance company may ask you to answer questions, provide recorded statements, submit a sworn proof of loss, or attend examinations under oath. We will ensure your interest is protected throughout these steps and proceedings.
Having a water damage claim approved and paid by the insurance company can be a complicated and difficult process. Contact us for a free consultation if you have questions or would like to speak with one of our insurance claim attorneys. Our job is to make sure the insurance company does its job by keeping the promises it made to you.