Dear David,
This summer, our kitchen was damaged by water. We have a home warranty and homeowners insurance. Fortunately, the warranty paid to repair the leaking pipe. Initially, the insurance company’s adjuster authorized the water mitigation company’s estimate but then denied our claim. The denial said, “[T]here was rot where the leaking occurred, indicating this leak has been ongoing for quite some time. We cannot approve this claim and must deny it.” The insurance company has stopped communicating and it feels like our claim was wrongly denied. What can be done?
Dear Wrongly Denied,
Hope is not lost, but supporting your coverage position will require an investigation. Let’s explore how you can gather evidence to support your claim by considering three things:
- Physical Evidence
- Time and Space
- Read the Full Policy
1. Document and preserve the physical evidence.
Often, a plumber is needed to identify and repair the leak. The location of leak may not be obvious, and some holes may need to be placed in the wall to try and find the source. Once the source is located, take photos and video before doing the repair. Photos are great but video can be better. Consider setting up a video and having the water flow into a container. Then, measure the amount of the water in the container. This can be used later to calculate the flow rate and could be important if your home is on a well instead of a municipal water supply.
Keep the broken pieces intact. Plumbers are usually happy to leave these broken parts behind—but often you must ask! Service standards are such that plumbers usually take the old broken parts away. In a claim situation though, ideally any time pieces are removed they should be set aside and preserved. The source of the water should remain unaltered after it is removed in the repair process. Do not let anyone—even the insurance company adjuster–take the evidence without a chain of custody document.
Even if your physical evidence is gone, hopefully you at least have a photo showing the source of the water.
2. Independently document time and space.
Implied in the insurance company’s reasoning is an issue of time and space. Specifically, what does it mean to have a leak “ongoing for quite some time”? We need to find ways to narrow the time and space in which the covered loss occurred. For example, if the leak source is on an exterior wall, the insurance company’s adjuster will immediately think—weather. Did the pipe freeze, break, and leak for months before being discovered? Did rain or melting snow find its way inside?
Your area’s weather history can help narrow the time in which your loss occurred. Weather Underground can help determine when temperatures were last below freezing and for how long. It also records the total precipitation.
Using your date of discovery, check the amount of precipitation in the previous weeks or months. Hopefully, the weather was dry. Additionally, check the temperature for the last freezing temperature and the duration.
Additionally, another tool that can help narrow the time and space in which your loss occurred are utility bills. Do these bills demonstrate heat was or was not maintained? Is the water metered? Is the sewer metered? Consider what it looks like to graph out these numbers over time. Often the utility providers will do this on the monthly bill.
3. Bill Wilson of InsuranceCommentary.com and the author of When Words Collide famously says— “RTFP, Read the full policy.”
Reading an insurance policy can be a stressful experience even without a claim looming in the background. These contracts are complex, but not impossible. I’ve written a previous article about how to read an insurance policy and it is available online. For now, the important thing to understand is that insurance coverage is typically looking for sudden and accidental damage. The “quite some time” aspect of the rationale seems ambiguous.
Let’s bring this all together to show how these lessons can take you from being denied to paid using a real-life example.
Step 1: Document and preserve the physical evidence.
By the time Advocate Claim Service was called, the physical evidence was gone. Attempts were made to contact the plumber to no avail. Additionally, they did not note any comments on the repair invoice. Fortunately, we had one photo, which you see here on the right.
Step 2: Independently document time and space.
The time period of interest involves the duration of ownership and the insurance policy’s effective dates. We were up against some pretty heavy pre-existing issues as seen in the next photo. The blue line in the lower right is the supply pipe for the exterior hose bib (the source). The rotten corner, appears to extended vertically up the exterior wall to a gutter along the roofline.
Next, we checked the weather. Our date of loss was Aug. 25, and it appears the last time it rained was very minor and it was a couple of weeks before the loss. We also checked for freezing temperatures and the last time a dip below 32 degrees occurred was February for less than 24 hours.
Lastly, we checked the water bills. Fortunately, this home was on a municipal water supply with monthly monitoring. The usage was about 1,400 gallons higher than the previous month and this image is very compelling that the water damage was sudden and accidental.
In this policy, the water damage exclusion was ambiguous because it refers to “a long period of time” with no additional meaning or clarification. An ambiguous term is open to more than one interpretation. Some insurance policies add clarification by adding a limitation of weeks, months, or years.
In this real-life case, the evidence suggests that a leak higher than the exterior hose bib contributed to the damage to the exterior corner. This is likely long-term damage that could be denied coverage. However, the evidence also suggests that a sudden and accidental water loss caused covered damages. The work to be done is separating covered from uncovered damages.
The moral of the story is that investigating your claim, preserving the available evidence and understanding the insurance policy can take you from wrongly denied to rightfully paid.
