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Don’t Get Hosed By Your Water Damage Claim

We all have a monster lurking in our walls, under our floors and above our ceilings.  Water seems so nice coming out of the faucet into our cup, or when waking us up in the shower each morning.  However, when a pipe ruptures, a fitting fails, or toilet overflows, it can ruin your day, and wreck your business.

If your business is housed in a multi-unit development, especially a multi- level building, you are also surrounded by your neighbor’s plumbing and a mishap in their space can rain havoc onto you.

As Murphy’s Law seems to dictate, water damage losses often seem to take place after business hours, during holidays and weekends.  Your first notice may be when you arrive at work on Monday or when you receive a call in the wee hours from your landlord or neighbor.

If the water monster does invade your space, it is critical that you understand the steps needed to help ensure your claim smoothly progresses so you are swiftly “made whole” again.

It may seem like a simple process to call an emergency service company, let them handle the dry out then send the bill to your insurance company, but you need to be proactive to protect your interests, especially in the initial water extraction and dry-out phase of your loss.

Most likely, your contractor will require you to sign a contract before they begin work. The contract will require YOU to be financially responsible for the full cost of their work, NOT your insurance company.

Delays in approval or payment by your insurance carrier due to disputed claim scope or costs can result in the contractor filing a mechanics lien against your property. So it is important that you take the steps needed to ensure that you, your contractor and insurance company communicate, work together and see eye to eye on the extent of work and the costs of work needed.

As a policyholder, you have Loss Conditions you are required to meet in order for your insurance company to pay your claim.  In a nutshell, they are basically requirements that you mitigate your loss and cooperate with your insurance adjuster so that they can verify the cause and value of your loss.

For a water damage loss, relevant Duties In The Event Of Loss Or Damage include, but are not limited to:

  • Give us prompt notice of the loss or damage, including a description of the property involved.
  • Take all reasonable steps to protect the Covered Property from further damage and keep record of your expenses necessary to protect the Covered Property.
    (This is your obligation to mitigate your loss.)
  • At our request, give us complete inventories of the damaged property and include the costs, values and amount of loss claimed. (This is your obligation to prove your loss.)
  • As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records.

Keep in mind that the insurance company has the right to determine the value of your lost or damaged property, or the cost of its repair or replacement.

Unlike a fire loss, where soot, char and other damage is clearly visible, portions of a water loss can be more difficult to prove.  The initial step, extinguishing the fire, is usually done at no charge by your fire department, but with a water damage claim, the initial water extraction and dry-out can be a significant portion of your claim’s overall cost.

Since dry-out needs to be largely accomplished within 48 hours to prevent mold and other damage from developing, most of the costs associated with drying out your property will be incurred BEFORE your insurance adjuster is able to inspect your damage.  Adjusters often prefer to wait until after the property has been fully dried out before they inspect so that permanent damage such as buckled floors, delaminated furniture and damaged walls become fully apparent.  Thus, your obligation to promptly mitigate your loss can make your obligation to prove your loss more difficult.  Therein lies the largest potential for headaches regarding your water damage claim.

Your goal is to ensure that the dry-out phase of your recovery is well-documented so your adjuster can justify payment for reasonable and necessary expenses incurred.

The seemingly simple tasks of using fans, dehumidifiers and wet vacs, etc. to remove water and moisture actually involves science and professional judgement.  Thus, there can be differing opinions as to the manpower and equipment needed for the most cost-effective way to dry-out your premises.

For instance, the classes of water, White (clean), Grey (wastewater) or Black (Sewage), determine the mitigation protocols.  Was the water hot or cold?  Did Whitewater drip through walls becoming Greywater? Is it a hot humid summer, or cold, dry winter?

Besides the square footage of floor, ceiling and wall area saturated, the cubic footage of the rooms must be calculated to determine the number, sizes and type of dehumidifiers that are needed.  The AHAM dehumidification formula uses the cubic feet of area, relative humidity, temperature, severity of saturation, materials involved and moisture removing capacity of various styles of humidifiers to determine the proper mode of action.

There are several types of dehumidifiers, each with different specialties and hourly/daily costs:  Refrigerant, Low Grain Refrigerant, Desiccant, fans and air movers.   They can be used in combination, depending on the conditions and materials that need to be dried.

Are your floors, concrete, hard wood, composite, tile, rubber backed carpet, jute backed carpet or carpet with pad?  Is your carpet glued down or tacked?  All these factors determine whether or not your floor and/or covering can be dried in place and salvaged or must be torn out and later replaced.

Are your damaged walls drywall, plaster or wood paneled?  Are the studs steel or wood frame?

As you can see, there are many factors that determine the scope of work and contractor decisions can be subjective in nature to some extent.  Yet, just a few days after your loss, much of the evidence that justified the remediation decisions and costs will have literally evaporated!

These tips should help your claim process go smoothly with as little disruption as possible:

  1. Report to your carrier ASAP, no matter the time of day or night BEFORE any work begins.
  2. While reporting to your insurance company ask if they have a list of approved Claim Service Providers, specifically, water remediation contractors.
  3. If they have a list, it is recommended that you select a vendor from that list.
  4. If your carrier has no approved list of contractors, vet potential choices by asking:
    A. How do you document scope of work and determine charges?
    You want a contractor who takes photos, draws diagrams, uses moisture meters and itemizes their charges with a professional estimating program such as Xactimate.  They need to know the AHAM formulas inside and out.  If they use the time/material approach or guesstimates based on their “experience”, etc., do not hire.
    B. Ask them if they have experience working with your insurance carrier. Ask for names.
    C. Will they be willing to resolve any pricing or scoping differences with your adjuster? A quality emergency contractor respects the role the adjuster plays in the process and is willing to fully cooperate. If they hem and haw or say that you must work it out with your carrier, do not hire.
  5. Request your adjuster to perform an inspection ASAP with your vendor. Promptly provide your contractor’s contact info to him/her and your adjuster info to your contractor.  If possible, put them on the phone together while in your presence so they can begin the approval process.
  6. In the likely event that work commences before your adjuster inspects, it is a good idea to make note of the number of workers, their respective tasks and number and type of work vehicles onsite. Take photos of the equipment they have set up as well as photos that show the extent of water damage and saturation. If floor coverings, wall moldings, etc. must be torn out, take photos of the items in place and after their removal so that their style/quality and damage are visible.
  7. If a disagreement develops on scope of work or pricing between adjuster and contractor, or there are delays in inspections, call your agent and request they get involved!

Once your dry-out is complete, the repair/restoration process can begin.  Visible post dry-out damage usually speaks for itself and is easier to verify, value and approve by your adjuster. The communication and expectations that you fostered early on between your insurance adjuster and contractor should continue to help the remaining restoration process work smoothly.

Information about the Author:  Bill graduated from East Carolina with a BS in Political Science before beginning his career with The Hartford as a multi-line claim rep in the Carolinas.  Moving to the DC area he spent eighteen years at Travelers in multiple claim roles including Property Supervisor, Litigation Claim Handler, Construction Defect, and lastly as Auto/General Liability Unit Manager in their Construction Department. As IA’s Director of Claims, Bill’s primary role is as an advocate for our clients and to manage relationships and rapport with our carriers. He is a technical resource for complex claims and disputes and also uses his experience to assist with loss control and training needs.  In his free time, Bill is passionate about rugby and has played since 1997 with his beloved DC based West Potomac RFC, up and down the Mid-Atlantic and in Europe, Canada, and Taiwan.  He has also been a member of the Fairfax Volunteer Fire Department since 2007 and is the proud father of two children, Lauren and Ron.

Bill Evans, AIC
Director of Claims
703.352.6493

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