Many people believe that when damage occurs to their home, they can make a claim against their insurance policy and all will be well. This is not necessarily so.
Here are two examples of where two insurance companies had initially denied coverage to the homeowners for part of their claims. The areas in both of the homes in question were undamaged by the cause of the loss. However, each town’s building inspectors required this additional code work as part of the overall repairs. The additional work was necessary to bring the homes into compliance with current building codes. Code upgrade repair costs can range from just a few dollars to tens of thousands.
In the two claims noted above, the issues of code compliance became an integral part of the repairs and settlements. The first claim dealt with frozen and burst water pipes that damaged the home. The addition attached to the rear of the home required complete removal of the ceiling, walls and floor to properly dry out the room. Once removed, it was discovered that insects and rot had damaged 60% of the wall and floor framing.
The claims adjuster from the insurance company advised that there was no coverage for the replacement of these materials. We disagreed and sought out industry opinions to help prove our case. In addition, we met with the town building inspector, who advised that we could not replace the insulation, wiring and coverings without first addressing the rotted and insect damaged areas. He also noted that the foundation was too close to the ground and it had to be raised to conform to today’s code requirements.
We presented these findings to the insurance company’s adjuster. Upon review, the insurance company agreed with us that the entire room had to be replaced, excluding the roof. The framing, windows, doors, electrical and heating utilities were replaced and paid for by the insurance company. The extra cost of the code work was $19,000. The repair costs of the direct water damages were $18,000. The code claim exceeded the water damage claim!
The second claim dealt with an electrical fire within old knob and tube wiring in a three-family rental building. Since the building was initially designed as a single-family home, there was no separation of electric usage between the units. This was unacceptable to the town’s electrical inspector. On his order, the client/landlord was required to replace, rewire as necessary, and separate out electric panels and meters for each of the three units.
Further, a fourth panel and meter had to be installed along with escape lights. The costs to complete these add-ons exceeded $15,000. Ultimately, the insurance company agreed to pay for these expenses as a result of our research and coverage interpretations.
Many claims have some sort of code requirement in them. However, without the knowledge of what to ask for and how, most property owners unnecessarily pay for these items out of their own pockets. Having qualified and competent Public Adjusters working for you can be the difference between your receiving money to complete these repairs or having to borrow money from your local bank.
You may wish to purchase this coverage if you don’t already have it attached to your policy. Contact your agent or broker to see if the coverage exists within your policy and if it’s sufficient to cover all that may be required for your home. An annual review of your policy with your agent or broker is recommended, just in case changes have occurred to the home or to the people within it during the year.
Wishing you all a claim-free and enjoyable summer.