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Water damage property claims are some of the most common claims insurance companies receive. A building's water damage can be the result of a leaking pipe, roof, washing machine, dishwasher or faulty roof. Knowing the cause of the damage is crucial to your claim. A sudden burst versus long-term seepage and leakage will be a significant fact that can decide if the loss is covered. Long-term seepage or leakage occurring over a period of days, weeks or months before being discovered, typically, is not covered by most standard insurance policies. It is important to understand your coverage and discuss concerns with your insurance agent before you agree to the policy.
Older buildings and their location may contribute to higher risk for water damage. Ask your agent about the need for water backup/sump pump overflow coverage for your building and business personal property. Water that cannot be moved from your building’s foundation, or backs up into your building due to blocked pipes, can be a leading cause for potential water damage claims.
Some insurance policies do not specifically state or define the “time period” that will trigger a policy exclusion using such nebulous language as “caused by or resulting from continuous or repeated seepage or leakage of water or stream which occurs over a period of time.” This language essentially permits the insurance company to assert almost any type of water leak that may have occurred over a couple of hours or more, as potentially excluded. Other policy language states, “Constant or repeated seepage or leakage of water or the presence of condensation or humidity, moisture or vapor, over a period of weeks, months or years.” This language provides the insured with a longer period of time to discover the loss. Many water losses are hidden, occurring behind walls or machinery, so that the leak may not be noticeable for days, weeks or months.
The insurance companies write the water exclusionary language as broadly as possible, so that the insurers can pick and choose which benefits will be paid and which will be denied. Leaving coverage to the insurers’ discretion and to their subjective interpretation of policy language most assuredly will not be to the benefit of the insured. This permits insurers to use the threat of potential total exclusion to coerce the insured to accept something less than what he or she is actually owed. These insurers may then lead the insured to believe they are being benevolent by providing coverage, as opposed to having a contractual obligation to provide coverage. Unless you are certain about how the water discharge occurred, do not make any statements as to how the loss occurred.
When reporting a water damage claim to the insurer, the insured should be wary of the insurer’s motives. The insurance adjuster, upon submission of the claim, may attempt to obtain admissions from the insured that the water leak occurred over a period of days, weeks or months. If you are not sure as to when the leak occurred, or how the leak occurred, then do not guess or speculate. Ask the insurer to send a forensic expert to determine when or how the leak occurred. If, however, you have a reasonable belief about when the water damage began or the leak first started, provide that information to the insurance company.
Speculating or mere guessing as to what occurred may result in a denial of a claim. Immediately read your policy to determine what type of water loss is covered and what is not. If uncertain about how to interpret the policy’s language in conjunction with your facts, seek guidance from an insurance claim professional representing policyholders, such as a public adjuster or an insurance coverage attorney.
The best way to prepare yourself is to fully understand what your insurance policy covers. Discuss any questions before a loss with your insurance agent, so that you can have peace of mind that your claim will be paid if you need to file a water damage claim in the future.
Originally Published Monday, 02 March 2015
AAHOA – American Asian Hotel Owners Association
By David Pettinato, Merlin Law Group
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