Sometimes I’m surprised at who reads me blog, as evidenced by some of the emails I get. Here is a recent one from a restoration contractor:

Mr. Wilson, I own a restoration and construction company in Arkansas. Although most of my losses are very obvious open and shut claims, I do have the occasional loss where water is involved and severe cumulative damage has occurred.

I recently visited a property where water had been entering at dormers for months causing over $35,000 in damage and was successful in getting it paid.

I am on another loss where water damage has been occurring and the homeowners are fully aware. Water is leaking directly into the living room coming down from dormer windows on the second floor and has been doing so for 6 to 8 months. The homeowners were afraid to file an insurance claim because they had been denied on another loss in the past that, from what I gather, should have been paid for.

If you have any advice for me, please educate me on what you recommend and whether or not this will or will not be a paid loss. The carrier is State Farm Insurance. I Appreciate you and all your hard work and selfless dedication.

This was my response:

Each homeowner’s claim experience depends on several factors, not the least of which is the policy language. The “ISO standard” homeowners (HO) policy usually covers interior rain water damage due to a leak in the roof, around a chimney, from a dormer, or whatever. Many other non-ISO homeowners forms (as well as ISO’s commercial property forms) do not cover interior rain water damage unless the water enters through an opening created in the exterior by windstorm…I believe State Farm has such a limitation in their HO form, but I’d need to review the form in question to confirm that.

And sometimes the adjuster just gets it wrong.

One problem in the instant case is that most policies have an exclusion like this one from the ISO HO forms:

Neglect means neglect of an “insured” to use all reasonable means to save and preserve property at and after the time of a loss.

I believe State Farm has this type of exclusion in their HO policy. The fact that this damage has been going on for some time and the insureds are aware of it likely means that it isn’t covered because of this exclusion.

Again, the key is what the policy language says, as read in the context of the unique facts and circumstances of each claim.

In addition, this illustrates that insurance is not a commodity. Some forms will cover such claims (if there has been no neglect or delay in reporting), while others won’t.

Photo by Andrew*

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Bill Wilson

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One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information