Author Topic: Homeowners Insurance  (Read 2734 times)

Kjmiller1984

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Homeowners Insurance
« on: August 17, 2015, 08:45:55 AM »
At what dollar cost is it a good idea to report a claim to your homeowners insurance? We had a leak we were unaware of and it has cause some water damage and mold in the walls. I figure it will be expensive to fix and trying to decide if we should deplete our savings for the repair or report it to insurance.
« Last Edit: August 17, 2015, 09:06:43 AM by Kjmiller1984 »

jba302

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Re: Homeowners Insurance
« Reply #1 on: August 17, 2015, 09:23:59 AM »
Generally speaking (you'll need to read your policy on this to be sure), mold damage is only covered when caused by a covered loss, which means sudden and accidental. For example, wind damage rips shingles off of a roof, water intrudes through the hole, causes mold. Another example would be a burst pipe. If your water leaking is caused by a maintenance issue - rusted pipe, leaking through flashing, poor drainage around the house, etc. then nothing is going to be covered.

Can you provide more details about the leak?

Kjmiller1984

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Re: Homeowners Insurance
« Reply #2 on: August 17, 2015, 09:53:51 AM »
The leak is coming from the fridge, where the water line goes into the icemaker. I went ahead and called the insurance and they said everything will be covered except our deductible. looks to be some extensive damage so i figured only paying 1k deductible plus slight increase in cost of insurance would be cheaper than paying for it out of pocket and depleting our savings.

jba302

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Re: Homeowners Insurance
« Reply #3 on: August 17, 2015, 09:58:06 AM »
So they are considering it sudden and accidental - the line burst from back pressure or frozen line or something. That's very fortunate for you! Mold remediation can be extremely expensive, so yes this would be one of those times where filing a claim would be preferable to a DIY resolution (personally speaking, especially based on my hatred for drywall work).

Kjmiller1984

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Re: Homeowners Insurance
« Reply #4 on: August 18, 2015, 01:08:05 PM »
So finally got assigned an adjuster today. After the gent on the phone told me he thought it would be covered. The adjuster said usually stuff like this isnt covered. So this could suck.... a lot. My question is, should i be pissed that the guy on the phone told me it should be covered and then directed me to a company they use for mold remediation? Also the mold remediation company hasnt been asking me if its ok to rip things apart, they have been calling the insurance company and asking them for permission to tear things up. If the insurance company isnt going to cover this, then shouldnt i get say in what work happens and who does it?

jda1984

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Re: Homeowners Insurance
« Reply #5 on: August 18, 2015, 02:00:07 PM »
In my jurisdiction, the owner has the authority to use whatever contractor he or she wants.  If the insurance doesn't cover it and you didn't authorize the work (did you sign any contracts?) it seems the contractor does not have a legal claim to file a lien or anything.  The contractor might not finish the job either if it's brought up, so it sounds like you need to get everyone on the same page to make sure the work being done is either going to be covered or that you want this company to do the work whether out of pocket or not.

jba302

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Re: Homeowners Insurance
« Reply #6 on: August 19, 2015, 07:30:46 AM »
So finally got assigned an adjuster today. After the gent on the phone told me he thought it would be covered. The adjuster said usually stuff like this isnt covered. So this could suck.... a lot. My question is, should i be pissed that the guy on the phone told me it should be covered and then directed me to a company they use for mold remediation? Also the mold remediation company hasnt been asking me if its ok to rip things apart, they have been calling the insurance company and asking them for permission to tear things up. If the insurance company isnt going to cover this, then shouldnt i get say in what work happens and who does it?

jda is correct. Homeowners insurance doesn't have this kind of authority in most (I'm not going to say all because I'm just not sure, but for sure MOST) jurisdictions. Insurance companies have preferred vendors we like to use, for several reasons - 1. quality of work is known, 2. tend to get a cheaper price, and 3. preferential scheduling. We can't force the homeowner to select a specific vendor though (again, in every state I've dealt with, which state are you in?), and if the insurance company authorized the work then denied coverage, that would be a lawyer situation pretty quick. Did the mold remediation company start any work?

You'd be reasonable to be upset, but honestly it surprised me that they said it would be covered. Based on what I initially read, it's truly not a covered loss because it was probably a slow leak / line maintenace issue. Perhaps the intake coordinator misunderstood you, or your explanation was not spot on correct. Either way, it is generally considered bad form, although not expressly incorrect, to say a loss should be covered and then rescind unless the change was based on new / updated information.

It does sound like you said the line is leaking, which was misunderstood as "this line SUDDENLY started leaking", when in fact the true statement would be "this line has been leaking for a while and now I have a shit load of mold." It's an extremely annoying point, but also why insurance policies are worded so carefully.

Kjmiller1984

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Re: Homeowners Insurance
« Reply #7 on: August 19, 2015, 08:26:58 AM »
I absolutely get that its not covered. I feel like it should be covered cause..... what am i paying insurance for? But thats not the issue im upset about. The gentleman i spoke with on the phone initially said hey, we use these guys (Service Pro). So i called them up and they asked for my claim number, so i gave it to them. They came out and started removing drywall. They then left came back the next day and said they called my insurance company and the insurance company told them to go ahead and come out and rip out everything, so they did. My contention is that had i known it would not be covered. I would have gotten bids and probably would have removed stuff myself after the mold had been treated, i also probably wouldnt have removed half a cabinet and the excess hardwoods that they removed, they also removed baseboards that were 10-15ft from where there was any water damage.

Do i have a leg to stand on, or am i just upset about the idea of spending $$$$$$?

jba302

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Re: Homeowners Insurance
« Reply #8 on: August 19, 2015, 09:05:48 AM »
Did you receive a Reservation of Rights letter from your insurance company? What paper correspondence have you received to date?

Also to add - I spent some time talking to some current property adjusters and we are all kind of in the same boat. To begin with, the wording choice of the first person you spoke to is fairly important. "That should be covered" isn't a commitment of payment, especially if they add something to the effect of "your adjuster will make the final decision." So in this first step, it seems like it would be a you vs. them argument.

The next part is fairly immaterial. "Hey we use servpro and they do good work." That isn't anything but a recommendation based on their prior experiences. So ignore that.

This next step is a contentious issue. If the insurance company said "yes go ahead and do the work, this is a covered claim" to servpro then the insurance company is responsible for all work done up until the day of denial. If it was just a confirmation that there is in fact an open claim, then there is no coverage promise. Should be covered is not in fact covered, and interpreting that statement incorrectly doesn't afford you coverage.

There is a general concept here called detrimental reliance which is more of a contract law term but applies. First and foremost, there must be a promise. In this case, it's a statement that says "this is a covered loss" either verbally or written, and a reasonable person would interpret as such. Without that, you don't really have a leg to stand on. BUT, the insurance company may still pay a portion or the full amount of the work up to the date of the denial statement. Since homeowners is first party, some companies are favorable to mistaken communication. I have paid for things just because I knew that someone heard me wrong or didn't actually understand the intent of an endorsement when they had it added, never the full amount but enough to say "yes I get that you weren't listening and I'm doing you a favor here."

And just as a point because you mentioned it - homeowners insurance pays for sudden and accidental. That is the core driving concept of property and casualty insurance. All endorsements and exclusions are written in a way to pay for "OH SHIT" and expressly not pay for "fuck it I'll deal with that later."
« Last Edit: August 19, 2015, 10:42:11 AM by jba302 »