You come home after the holidays and find a small pond in your basement that has materialized. Something in the house leaked, spilled, or exploded. Your first reaction? Panic. Second: Will insurance cover this?
Take a deep breath and avoid panic. The following steps should help you.
How to get water damage covered by insurance
- Determine the source of the water; take steps to keep it from flowing. When you are sure it is safe to do so, take immediate action to prevent more water from flowing where it shouldn’t. This can mean closing your home’s main valve (which often requires a faucet) or a single water supply valve. , also known as “stop”. Stops that lead to your dishwasher, toilet, washing machine, or ice cube maker can usually be turned off manually (clockwise) to stop the flow of water. Learn more about closing the water supply valves here. By the way: Before a disaster occurs, you should find out about water leak detection systems and automatic shut-off valves. With a small investment, you can avoid serious damage and potentially save money with a discount on home insurance.
- Determine if your home insurance covers water damage. In 2018, almost every fourth loss in household insurance was due to water damage. Water damage is NOT insured if it is the result of poor maintenance or neglect in the house (e.g. a roof that has not been repaired in 30 years). Water damage generally covered by home insurance if it is Sudden and accidental problems with plumbing or equipment, Frozen and burst pipes, Leaking roof, Ice dams, Vandalism (remember the Wet Bandits in Home Alone?) Water damage generally will NOT be Covered by home insurance if Groundwater getting into your basement Flood or rapid thawing into your basement (unless you have flood insurance) Sewer or backup water pipe (unless there is one Backup for sewage backups that can easily be added to any homeowner’s policy) Leakage on old and corroded pipes Leakage on an old roof without maintenance Damage from permanently leaking faucets or toilets not repairing mold, rot or fungus (unless the cause is covered)
- Call your insurance agent and report the claim. In the event of water damage, time is of the essence. According to FEMA, mold and mildew can develop 24-48 hours after exposure. So if your pipeline bursts on Friday night, don’t wait until Monday morning to let your agent / insurance company know what’s going on. If you cannot completely clean and dry the area yourself, it makes sense that you at least contact a water damage / remediation company. Insurance companies may not be ready to recommend a specific water damage company, but they should help you identify several local options to choose from. NOTE: If your personal insurance agent is unavailable to speak to you at the time the claim occurred, be sure to follow up during business hours. Why? There is a huge difference between insurance agents and insurance companies. Ideally, both of you should know what is going on in your home. In the event of a claim, your agent’s job is to act as your advocate and make sure you get a timely and satisfactory response from the carrier. Agents can also help you negotiate compensation for damages.
- Professionally clean the water and moisture.
A Water Damage / Remediation Contractor is often required to pump out standing water and thoroughly dry any surface before moisture or mold spreads. after sealing and ventilating the wet area. Please note that the Water Damage / Remediation Contractor you choose doesn’t have to be the same company you use to repair walls, floors, ceilings, cabinets, etc. after the water is removed, in addition to water and mold repairs, often they are not the best option for your repairs. Don’t sign any contracts or accept additional repair work without getting a quote and talking to at least one other contractor. Often times, the best person for carpentry, flooring, or drywall is someone who specializes in carpentry, flooring, or drywall, not a Water Damage / Remediation Contractor. - Determine if you need to leave the house. In severe cases, water damage can lead to unsafe or unsanitary living conditions in the house. A major flood can draw household chemicals or sewage into the mixture, something that shouldn’t happen. There is a risk of electric shock and mold spores can pollute the air even after the standing water has run away. If you suspect any of these issues may be at stake, ask your agent and Water Damage / Remediation Contractor team for advice on the safest course of action. However, you will want to know how much coverage (if any) you have for these items and how you are likely to manage and list those costs. Eat elsewhere, be ready to save receipts.
- Take photos of the damaged area and damaged items. Your home restoration team will likely be taking pictures of the damaged area, but you should take your own. (If you later decide to cut ties with this company, you don’t want to chase them down for documents.) You should also take pictures of anything that needs cleaning or replacement. they are only part of the loss. Objects in drawers or cupboards where mold has formed should also be professionally cleaned. You may be entitled to a reimbursement for these costs. NOTE: In the event of water damage, most insurance companies will not cover the device that caused the failure. For example, if your ice maker or dishwasher leaks behind your cabinets, your insurance may cover drywall and cabinet replacements, but not a new refrigerator or dishwasher.
- Meet with your adjuster. The insurance company will send an expert to your home as soon as possible, who will assess the damage, take photos and intervene. The adjuster will also ask you questions about how and when the damage occurred. Its goal is twofold. try to estimate how much it will cost to repair the damage. The second is to determine whether someone was to blame. You might be thinking, uh oh … what if it was my fault? Do not worry. Unless you intentionally caused the problem (e.g. insurance fraud), your insurance policy is there for you. The insurance is intended for accidents. Even Stupid ones. If you leave a candle burning overnight and your house catches fire, it is still covered, although yes it was your fault. The same principle applies to water damage. If you (incorrectly, accidentally) install your own toilet and water starts raining through the ceiling, you are still covered. Your insurance company can try to claim compensation from the manufacturer of a defective washing machine. This is good news for you because if you can successfully subrogate, you may not have to pay your deductible to claim.
- Understand Your Loss Adjustment: ACV vs. Replacement Costs.
At some point after your appraisal, your appraiser will send you a written estimate of what they think should cost the repair of your damage. You will likely create a list of line items for work and materials (drywall, paint, mortar, tile, etc.). Also, depending on the amount of damage, you can write a check for all or part of that amount so that you can begin the repair. Warning; This payout number may seem a little low. Unless your home insurance has been written to provide a “replacement value”, your overall estimate will likely be based on an actual present value, or ACV. The ACV represents the true value of your property today, not what you paid for it or what it would cost to remodel it. For example, if you spent $ 20,000 on new cabinets 15 years ago, your loss statement will reimburse you for $ 20,000, minus depreciation. Here is more information about ACV versus replacement cost. Here’s a tricky caveat … in some cases, insurance companies offer something called a “depreciation allowance”. That means they’ll pay you back the remaining depreciation in the end, but only after you have demonstrated that you used all of the money they gave you for the related repairs and also paid your deductible for the repairs. Why do insurance companies pay damage this way? In part, it’s because they make sure you’re using the money as intended. More than once, a homeowner has accepted a water damage settlement and gone to Las Vegas without worrying about the damage they claimed. Or, you’ve used the entire estate to dramatically upgrade part of your home by replacing the linoleum tiles with Brazilian hardwood. Part of the adjuster’s job is to keep you on the path to a complete and fair repair.
Note: Insurance company settlement checks are often made out to you and your mortgage lender, which means you need to mail the check to the mortgage company and obtain confirmation from the draft loss department before you can cash in, rather than time and frustration for the repayment process make sure your lender knows that your home has been damaged. Once they know, they can request a home inspection after the repairs are complete. - Meet with multiple contractors. Now that the water is gone and the chance of mold or mildew is removed, it is time to repair / rebuild the affected area. For small jobs, it may not be as important to meet with multiple contractors. After all, the difference between a few hundred dollars might not be worth the time you would spend contacting, interviewing, or visiting different professionals. On the other hand, if you are considering a large project, especially one with multiple subcontractors, it makes sense to find the best partner. Again, your insurance company won’t tell you who to contact. It is up to you to review contractors, make sure they are properly licensed and insured, and compare their offerings against your appraiser’s billing numbers. Another benefit of meeting multiple contractors is that if you think your appraiser’s estimate is too low, it can help show that more than one professional is in agreement.