Last Summer, a kitchen was damaged by water. They had 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 the 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 had stopped communicating and it felt like the claim was wrongly denied. What can be done?
Hope is not lost but supporting a coverage position requires an investigation. Let’s explore how to gather evidence in support of a claim by considering three things 1) Physical Evidence, 2) Time and Space, and 3) 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 a 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 flowrate 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 the physical evidence is gone, hopefully at least have a photo showing the source of the water exists.
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?
Weather history can help narrow the time in which a loss occurred. Weather Undergroundcan help determine when temperatures were last below freezing and for how long. It also records the total precipitation.
Using the date of loss, 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 steps can move a claim from denied to paid using a real-life example.
Step 1: Document and preserve the physical evidence.
In this real-life situation, by the time Advocate Claim Service was called, the physical evidence was gone. Attempts were made to contact the plumber to no avail. Additionally, no notations were made on the repair invoice. Fortunately, we had one photo showing the source.
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. Logically, enough seperation existed to differentiate old from new damage.
Next, the weather was reviewed. The date of loss was August 25th and it appears the last time it rained was less than 1" a couple of weeks before the loss. Also, check for freezing temperatures and the last time a dip below 32 degrees occurred was February for less than 24 hours.
Lastly, the utility bills were checked. Fortunately, this home was on a municipal water supply with monthly monitoring. The usage was about 1400 gallons higher than the previous month and the image on the bill was very compelling. It showed conclusively the water damage was sudden and accidental.
Step 3: Read the full policy.
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.
The moral of the story is that by investigating the claim, preserving the available evidence and understanding the insurance policy one can go from being wrongly denied to rightfully paid.
David Princeton, CPCU, AMIM,AIC, CSRP, is the principal consultant of AdvocateClaimService.com, an expert witness, and contributing author of Be Intentional: Culture. He attends Marquette University Law School and previously served as a director of corporate risk and as a lead claim specialist.
Advocate Claim Service takes the anxiety out of claims. Our mission is the strategic presentation of claims to get policyholders the benefits owed under an insurance policy. Claim consulting services are provided to Policyholders, Brokers, and Attorneys. As licensed insurance professionals, we have over 35 years of insurance claims experience across a wide array of coverage lines. In addition, our Insurance and Risk Management consulting practice is well suited to provide clarity to just about any insurance program.
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