Yesterday, I was on a flight to sunny South Florida to meet with a client, and ran into a large loss adjuster who works for one of the major insurance carriers heading the same way. When you meet a fellow adjuster or colleagues who are in the business, usually the first question is to ask if you are busy. This seasoned adjuster side tells me the claims are rolling in from the areas that were affected in the big freeze caused by the “polar vortex” last week. It seems his company is so overwhelmed, that they have staffed call centers with independent adjusters just to handle the call volume.
A few days before my flight, a contractor friend of mine who was an appraiser in a claim I had just finished an umpire assignment on told me his whole company was marshalling their forces to head north due to pipe breaks and the resulting water damage. His opinion was that this “polar vortex” freeze event will potentially be bigger than any recent hurricane since it is impacting so many parts of the country.
So I suspect the first question most policyholders will have is if this type of loss will be covered. In my opinion almost all water losses from broken pipes should be covered under a homeowners or commercial policy. But remember, not all insurance policies are alike and each property owner should take the time to check for coverage either by calling their agent or reading their specific policy. Remember, there may be requirements in some policy forms for the insured to maintain a certain temperature in buildings and homes. Other losses I have worked have required homeowners to have a working alarm system so in the event the heat is off, it sends an alarm to a central monitoring location so the policyholder or a service company is notified and can make the necessary repairs. Failing to maintain policy requirements with these types of clauses in them can trigger a denial, so beware.
While it is important to understand coverage, it is a duty of the policyholder to start the cleanup and mitigation process in order to prevent further damage. So there will be pressure on the policyholder to hire qualified and professional help. Given this high pressure environment, policyholders need to keep their eye on the ball or in this case the money. Unscrupulous contractors will no doubt try and take advantage of many folks and it is important the policyholder read and understand the work authorization forms that will be pushed on them by the emergency service crews. Even if they are supposedly sent from the carrier! Remember you are signing these forms, not your insurance company.
So what’s the big deal? Simple, if price gouging occurs your insurance company is not likely to pay anything but reasonable and necessary clean up and repair cost. The difference will be your responsibility since you agreed to pay when you signed the work authorization.
A good tip to avoid this problem is to add language to the work authorization that any billing is subject to an agreement and approval by your insurance company. Some emergency service companies may balk at this but others may agree so they don’t lose the business. Having the clout of your insurance company in disputes regarding emergency services costs can be a powerful ally. If you do not have this spelled out on the emergency service agreement contract up front, you likely have the burden to try and negotiate any price scope dispute yourself.
Your best bet to avoid this problem is have to the insurance adjuster and the contractor agree on the scope and price of the loss before commencement of the work. Unfortunately, in a large catastrophic environment like this “polar vortex,” it may be days or weeks before an adjuster gets out to inspect your loss. So while a claim may be reported and a claim number assigned, remember you are going to be on your own in the initial stages of the claim. Please pay attention to all that is being done and said. I would also suggest you keep a daily diary of all conversations and commitments that take place, with names, phone numbers, emails, business cards etc preserved for later reference if needed. Use email to send confirmations, instructions, etc. that may be given by any party to you about your loss.
I will write more about some of the issues associated with water damage that results from frozen pipe breaks in my next blog. 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.