You come home from vacation to find a small pond has materialized in your basement. something in the house has leaked, overflowed or exploded. your first reaction? panic. your second: how do you get insurance to pay for water damage? Take a breath and avoid panic. the following steps are designed to help.
how to get insurance to pay for water damage
- determine the source of the water; take (reasonable) measures to prevent it from flowing.
- determine if your home insurance policy covers water damage.
- Call your insurance agent and report the claim.
- if necessary, hire a professional water damage cleanup company.
- determine if you need to leave the house.
- Take photos of the damaged area and any damaged property.
- meet with your adjuster.
- Understand Your Loss Settlement: ACV Vs. replacement cost.
- meet with multiple contractors.
- negotiate the settlement for reparations.
- be prepared to be canceled or not renewed.
step 1: determine the source of the water; take steps to prevent it from flowing.
If you’re sure it’s safe to do so, take immediate action to prevent more water from flowing where it shouldn’t. This could mean turning off your home’s main valve (often requiring a wrench) or an individual water supply valve, also known as a “stop.” Stoppers leading to your dishwasher, toilet, washing machine, or ice maker can usually be closed (clockwise) by hand to stop the flow of water. here is more information on how to close the water supply valves.
By the way, it’s a good idea to research water leak detection systems and automatic shutoff valves before a disaster strikes. With a small investment, you could avoid a serious claim and potentially save money through a home insurance discount.
Step 2: Determine if your home insurance policy covers water damage.
In 2018, nearly one in four home insurance claims was due to water damage. From 2014 to 2016, the number of water damage claims in the US. uu. it actually exceeded the number of losses caused by fires and hurricanes. What do these numbers mean? water damage is quite common. but not all types of water damage are covered by a typical homeowner’s policy.
As a general rule, water damage is covered by home insurance if it is sudden or accidental. In other words, you couldn’t have predicted what was going to happen. water damage is not covered when it is the result of poor maintenance/neglect in the home (for example, a roof that has not been repaired in 30 years). Flood damage is also not covered (unless you have a separate massachusetts flood insurance policy).
water damage normally covered by home insurance
- sudden and accidental plumbing or appliance problems
- frozen and broken pipes
- leaky roof
- ice dams
- vandalism (remember wet bandits home alone?)
- groundwater entering your basement
- floodwater or rapid meltwater entering the basement (unless you have flood insurance)
- water or sewer pipe overflow (unless you have a sewer overflow endorsement, which is easy to add to any homeowner’s policy)
- leaks from old and corroded pipes
- leaks from an old unmaintained roof
- damage from faucets that drip for a long time or toilets that are not repaired
- mold, rot, or fungus (unless the result of a covered cause)
water damage is not usually covered by home insurance
Step 3: Call your insurance agent and report the claim.
When it comes to water damage, time is of the essence. According to FEMA, mold and mildew can begin to grow 24 to 48 hours after exposure. so if your pipe bursts on Friday night, don’t wait until Monday morning to let your agent/insurance company know what’s going on. Most carriers maintain 24/7 hotlines to guide you through the claims process and advise you on cleanup.
Unless you can completely clean and dry the area on your own, it makes sense to at least contact a water damage/restoration company. Insurance companies may not be willing to recommend a specific water damage company, but they should be able to help you identify several local options to choose from.
Note: If your dedicated insurance agent is not available to speak with you at the time the claim arises, be sure to follow up during business hours. why? There is a big difference between insurance agents and insurance companies. Ideally, you both know what’s going on in your house. In the event of a claim, it is your agent’s job to act as your advocate and help ensure that you are receiving a timely and satisfactory response from the carrier. Agents can also be valuable in helping to negotiate a damages settlement (see step 6), one of the reasons we recommend working with an independent agent, rather than a direct writer or “captive” agent.
Step 4: Have a professional clean up the water and moisture.
A water damage/restoration (wd/rc) company is often required to pump out standing water and thoroughly dry surfaces before moisture or mold can spread. if mold is already present, the wd/rc may need to apply special cleaning solutions, after sealing and airing out the damp area.
Not all water damage and restoration companies are created equal. some, unfortunately, may try to take advantage of an emergency situation, where they need help quickly. Before signing any contract or work order, be sure to get an estimate and written proof that the company is licensed or insured. read online reviews of the company. Ask for references from clients in your area or neighborhood.
Note that the wd/rc you choose does not have to be the same company you use to repair walls, floors, millwork, ceilings, cabinets, etc. after the water has run out. Many water damage companies offer contracting services in addition to water and mold remediation, but that doesn’t mean they’re the best option for your repairs. again, don’t sign any contracts or take on additional work without getting a quote…and talking to at least one other contractor. Often the best person to do carpentry, flooring, or drywall is someone who specializes in carpentry, flooring, or drywall, not a wd/rc.
Step 5: Determine if you need to leave the house.
In severe cases, water damage can lead to unsafe or unsanitary living conditions inside the home. large floods can bring household chemicals or sewage into the mix, something you shouldn’t overlook. the risk of electrocution may be present. And even after standing water clears, mold spores can still pollute the air.
If you suspect any of these issues are at play, ask your agent and your wd/rc team for advice on the safest course of action. Most insurance policies include coverage for hotel accommodations and even meal expenses if you are forced to vacate. but you’ll want to understand how much (if any) coverage you have for these items, as well as how you’re expected to meet and price these expenses (pay yourself before you’re reimbursed). if you stay and eat elsewhere, be prepared to save your receipts.
Step 6: Take photos of the damaged area and damaged belongings.
Your home restoration team will likely take photos 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 be chasing them for documents.) You should also take photos of any items that need to be cleaned or replaced. With water damage, objects that get wet are only part of the loss. Items in drawers or cabinets where mold has spread should also be professionally cleaned. You may be entitled to reimbursement for those expenses.
Note: In the event of water damage, most insurance policies do not cover the appliance that caused the problem in the first place. So, for example, if your icemaker or dishwasher leaks behind your cabinets, your insurance may cover replacement cabinets and drywall, but not a new refrigerator or dishwasher.
Step 7: Meet with your adjuster.
As soon as possible, the insurance company will send an adjuster to your home. he or she will assess the damage, take photos and take measurements. The adjuster will also ask questions about how and when the damage occurred. its objective is twofold. First, he is trying to estimate how much it will cost to repair the damage. second, it seeks to determine whether someone was at fault.
You may be thinking, oh, oh… what if it was my fault? don’t worry. Unless you intentionally created the problem (for example, insurance fraud), your insurance policy is there for you. insurance is intended for accidents. even silly accidents. If you leave a candle burning overnight and your house burns down, you’re still covered, although yes, it was your fault. the same principle applies with water damage. if you install your own toilet (incorrectly, by accident) and water starts raining through the roof, you’re still covered.
However, if it was someone else’s fault, the insurance company has an interest in finding out. Let’s say, for example, that you didn’t incorrectly install that toilet; let’s just say he was a licensed plumber, who should have known better. In that case, your adjuster and your insurance company may seek “subrogation,” which means going after your insurance company for the damage you caused. ditto for a faulty appliance. Your insurance company may seek to collect damages from the manufacturer of a washing machine that is not working properly. This is good news for you because if they can be successfully subrogated, you may not have to pay your deductible for the claim.
Step 8: Understand Your Loss Settlement: ACV Vs. replacement cost.
Sometime after your assessment, your adjuster will send you a written estimate of what they think it should cost to repair your damage. You’ll probably create a line item list for labor and materials (drywall, paint, mortar, tile, etc.). depending on the size of the claim, you can also write a check for all or part of this amount, so you can start repairs. hooray!
just be prepared; That settlement figure may seem a bit low. Unless your home insurance policy was written to provide “replacement cost value,” your estimate total will likely be based on an actual cash value or ACV. ACV represents the current value of your property, not what you paid for it or what it would cost to renovate. So, for example, if you spent $20,000 on new cabinets 15 years ago, your loss settlement would reimburse you for $20,000 less depreciation. here’s more info on acv versus replacement cost.
Now, here’s a misleading warning…in some cases, insurance companies will offer what’s called a “depreciation retention.” This means that they will eventually return the amount of depreciation they took away, but only after you show proof that you used all the money they gave you for the relevant repairs and also paid your deductible for the repairs. As proof of payment, you will be required to send bank statements or canceled checks to the various vendors involved.
Why do insurance companies pay claims this way? In part, it’s because they make sure you’re using the money as intended. More than once, a homeowner has settled water damage and run off to Las Vegas, never addressing the damage he claims. or they have taken over the entire settlement to drastically improve a part of their home, replacing linoleum tiles with Brazilian hardwood. Part of the adjuster’s job is to keep you on track for a full and fair repair.
Note: Settlement checks from insurance companies are often made out to you and your mortgage lender. this means you must send the check to the mortgage company and get approval from the loss-draft department before you can cash or deposit the funds. This somewhat annoying extra step can add time and frustration to the repayment process, but it is designed to ensure that your lender knows there was a damaging event in your home. once they know, they may require a home inspection after the repair work is complete.
Step 9: Meet with multiple contractors.
Now that the water is gone and the danger of mold or mildew has been eliminated, it’s time to repair/rebuild the affected area. For small jobs, meeting with multiple contractors may not be as important. after all, the difference between a few hundred dollars may not be worth the time you’d spend contacting, interviewing, and visiting different professionals.
On the other hand, if you’re looking for a major project, especially one that involves multiple subcontractors, it makes sense to find the best partner. again, your insurance company will not tell you who to use. It’s up to you to vet contractors, make sure they’re properly licensed and insured, and compare their quotes to your adjuster’s settlement figure. Another benefit of meeting with multiple contractors is that if you think your adjuster’s estimate is too low, it can help to show that more than one professional agrees.
Step 10: Negotiate the settlement for repairs.
For small claims, negotiation may not be a problem. But larger projects often present challenges, in terms of getting your adjuster and contractor on the same page. this is where your independent insurance agent can also be a resource. If you don’t have the stomach to haggle over what constitutes similar replacement materials, ask your agent to act as your broker. he or she has more experience with this process and probably knows how to frame the case you are trying to present.
Note: Although you can’t expect your insurance company to pay for improvements to your home (features and materials you didn’t have before the damage), you can take this opportunity to update the damaged area, whether it’s a kitchen, bathroom, or basement. , and pay for it yourself. Many homeowners who experience water damage find they don’t want to go back to the same old 1970’s bathroom tile or laminate countertops. If this matches your situation, be honest with your adjuster about your goals and plans. work with your contractor to calculate the difference between repairing the bathroom as it was and creating the bathroom you really want.
step 11: just in case… be prepared not to be renewed.
This does not always happen. Many homeowners happily continue their relationship with their current carrier, but did we mention that your insurance company may choose not to renew your policy after a major claim? sucks, we know. and for many people, it seems unfair. you pay the insurance in case you need help. and then when you do… you get punished for it.
The truth is that insurance companies take advantage of complex formulas to determine which risks (and which clients) are worth taking. this helps them remain profitable enough to help the people they promise to help. if they promised they could help everyone, regardless of loss history, they’d be out of business pretty quickly.
but hey, here’s another reason why it’s a good idea to work with an independent insurance agent. If your home insurance is cancelled, an independent agent can help you find other options. Here at c&s, we have many carrier options. We’re always happy to help, too, whether the question is how to get insurance to pay for water damage or how to find the best rate on my auto and home insurance. call us: 508.339.2951.