This Q&A came via a question we were asked via the United Policyholders "Ask the Expert" feature that we contribute to. 

Q. I have filed a claim for water damage to my living room. The adjuster provided details of coverage prior to mitigation, for $1, 762.68 including my $1,000 deductible; for which I paid. The mitigation folks provided another estimate of an additional $6,000 to my insurance adjuster. This was their estimate once they opened up the wall where the water was causing damage. Two major findings, once they opened up the wall: 1) they discovered a pipe leak 2) two beams are termite infested! Neither are covered under my insurance (Nationwide)! The company that came in to do the recovery completed the cleaning, disinfecting, and drying out process. However, they informed me that they would not replace the wood beams that are damaged by termites. I paid for the restoration of the pipe out-of-pocket but cannot afford to pay anymore additional repairs. I explained this to them; to which they replied, "you can cash out and get another estimate." I told them that I needed to get further guidance. They said they would get back to me and left. I have not heard from them, and now I have one wall and part of the floor in my living room exposed. What are my options?

A. Your problem is a common one in the insurance adjusting world. I suspect there will be a lot more questions as disputes arise on this issue given the recent freeze from the “polar vortex” weather event last week. I am told there is an unprecedented number of frozen broken pipes and resulting water losses all over the eastern half of the U.S. and now another one is on its way but hopefully not as bad as last week’s weather.

Now, regarding your loss. I agree the cost of the actual repair of the broken pipe is not covered. But generally this cost is minor compared to the cost of getting to the pipe and then replacing the entire tear out that was necessary for a plumber to do their work. So any cost to remove drywall, wall boards, baseboards, wall insulation, etc. and put them back to their pre-loss condition is part of your covered loss if they are damaged or destroyed to get to the broken pipe. If the beams are impacted to the extent where they have to be repaired or replaced to fix the area torn out, then that cost should be covered as well. Proper handling of water losses requires a high level of experience and training.

Often the cost of the actual pipe brake is minor but the resulting damage is often far greater. The baseboard needs to be open to let wall cavities dry out and wet insulation needs to be removed. Insurance companies do not like to pay for this scope of work, but if it were their home you can bet they would pursue this method of recovery. So based on the facts from your question, the cost to fix the pipe itself is not covered, but any and all costs to tear out and put back all building materials, wall finishings (including termite damaged beams) is part of your whole covered loss if they are torn out to access the broken pipe. Your deductible should apply against the WHOLE COVERD LOSS. These two items, your deductible and the plumber’s bill, should be the only out-of-pocket expense you have. Ask the adjuster to give you a “Statement of Loss” which will have the breakdown of the proposed settlement. If they do not cover all tear out and put back costs as well as the emergency services billing, you are being short changed. If the local field office will not do a re-inspection and agree with you, do not be afraid to write a letter to the Vice President of Claims at their home office address, and send a copy to your state insurance commissioner. Good luck.

If you have questions regarding any property insurance related issues, please call 800.321.4488 or contact us to submit a question to one of our public adjuster or insurance claim experts.