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Mr. Miller has many years of experience in designing and implementing a comprehensive variety of Trusts, Wills, and other estate planning documents, as well as settling estates in the most expedient and appropriate method. Further, he counsels and assists clients on becoming eligible for VA benefits and Medi-Cal.

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Dealing With Water Claims Part 2

By merv,

  Filed under: Insurance

This is the second part of a two part article on dealing with Water Damage Claims. In Part 1 we discussed the “Players,” all the parties that are involved in a claim of this type. You can read Part 1 here.

Endorsing the Checks
The environmental testing companies
Take Photos
Keep Track of Payments
Supplemental Payments
Loss of use of the House
Electrical Usage
You don’t have to rebuild it exactly like it was
Requirement of Uniform and Consistent Appearance


Endorsing the Checks: But wait, it gets worse. The bank, at least ours, wants us to endorse the check prior to sending it to them (just in case they consider the claim big enough to retain the check and handle the payment to the contractor themselves in order to make sure things go right), and then they will endorse and send it back to you. Here’s the problem: if you endorse and send it to them, they endorse and send it back to you, and before it arrives it gets lost–anyone who finds that check can cash it. Unless the bank endorses by “special endorsement,” i.e. “Pay to the order of Mike Smith” and then signs off. Unfortunately, in both of our claims, the bank would not issue a special endorsement.

The environmental testing companies: The water remediation folks asked us if there was any asbestos in the “cottage cheese” type ceilings. We have had that tested previously so we told them there was not. They had it checked anyway by an enviromental company. We passed. But then when it was time to take the mirrors off the bathroom walls they found mastik (the glue that holds the mirrors on the wall). Did that have asbestos? We really didn’t know but felt pretty safe in that the remodel by the prior owner had occured around 1989 and the last mastik with asbestos was manufactured in 1983 or so. The remediation folks wanted it tested (so would I). It proved positive. I guess someone had some old inventory they used on that job in 1989. Now don’t panic. The costs of the testing companies, remediation folk, and hazmat guys removing the asbestos are typically covered by the insurance policy. (You might want to check with your agent to make sure your policy is the same.)

The day of the loss, we called the insurance company to report the claim and they gave us references to a few water remediation services. We selected one and in they came. They broke walls, cut up carpet, etc. That is all well and good but eventually you are going to have to settle up with the insurance company and, to do that, you and they need to know what the situation was prior to things being removed. This is where photos come in. The remediation company is probably going to take photos.

Take Photos: Here is what happened to us. We had a medicine cabinet in the master bath. Sort of recessed into the wall and surrounded by a mirror. When it was time to install the medicine cabinet the contractor asked us where it was. I had no idea. I suspected it disappeared when the Hazmat folks cut out the walls with the asbestos-laden mastic. We had photos by the remediation company of the master bath. But it really did not show the medicine cabinet. If the cabinet door had been opened when the photo was taken, no problem. So you need to take photos, also. Take it of everything and then figure out what you missed. And do it before the remediation folk come in-they just move too fast to wait until they are there.

Keep Track of Payments: You need to keep track of payments and never allow your payments to the contractor to get ahead of the work. You need to keep track of subcontractors and material suppliers to make sure they have been paid so you don’t wind up with mechanics liens against your property.

Supplemental Payments: As I said, we have received four checks at this point. Each time it turned out that costs were going to be higher for something than originally thought or that work that had not originally been contemplated would be necessary, a new check was issued. Now, don’t get me wrong, we had to get bids from various service providers to prove the amount but once that was done, it wasn’t very difficult to get the check issued.

Loss of use of the House: If the house is uninhabitable, then another portion of the policy generally kicks in to cover your additional living expenses. I have been told by another unlucky person who experienced such a claim that her insurance company took the position that as long there was heat, a kitchen, and a bathroom the building was habitable. I can’t say if that is really what the company said but our company took a different approach. We had a usable bathroom and heat and a kitchen. What we didn’t have was a place to sleep. The master bedroom was a wreck and the other bedrooms were chuck full of the furniture from the mater bedroom and downstairs bedroom. They agreed the house was uninhabitable. They initially wanted to put us up at a hotel about 5 miles away. I believe Hampton Inn was one of the selections. I have no problem with Hampton Inn and have stayed at that brand on my various travels. But it would not have been appropriate long term (in our case, about a month). Although I have not researched this issue, I suspect the insurance company has a duty to provide the insured with living quarters appropriate to their typical standard of living. And in our case one room in a hotel was not going to do it. They asked for my wife’s assistance in finding suitable quarters, particularly because it had to include our dog and there are not too many hotels in our immediate area. We wound up at a Four Seasons. Very nice and I have no complaints. I guess the moral here is you don’t have to accept the first thing the insurance company offers you. There is “play” here.

Electrical Usage: You should get reimbursed for the electrical consumption caused by the fans and dehumidifiers placed by the water remediation folk. In San Diego electricity is expensive. I calculated that it cost me $550. That is much more than my adjustor was accustomed to seeing. He wanted a copy of the prior months bill and the current month to compare. Since I have solar power and the air conditioning was out during this time period, I refused as those bills would not have sufficiently illustrated my loss. It really is a very easy computation: you have 120 volt coming out of the wall. Take a look at the electrical plate (and take photos) of each of the devices drawing power to determine how many amps each draws and keep track of how many hours they are on. Volts x amps x time=watt hours/1000=kilowatt hours. Multiply the kilowatt hours by the rate you pay the electric company and that is it. Eventually, the insurance company and I will even up on this issue.

You don’t have to rebuild it exactly like it was: You can do whatever you want, change the color, move walls, whatever. That is not an insurance company issue–they don’t really care. They just have to pay what it would cost to rebuild it exactly like it was.

Requirement of Uniform and Consistent Appearance: If you have a partially damaged house, as we did, the insurance company is obligated to pay to provide you with a uniform and consistent appearance at the end of the job. Now since they don’t select the contractor they don’t typically owe you a duty to make sure that the contractor does a good job–that is your responsibility. However, if the carpet in half of the room is ruined and that carpet is ten years old, it is unlikely that you will be able to find carpet that matches it (things change color based on age). So the insurance company is probably going to have to pay to replace the carpet in the entire room. This also applies to paint, shelving etc. The adjustor explained to me that he doesn’t consider trying to match what is in the other room unless the two rooms abut up to each other and the door is normally open. There would appear to be a lot of subjectivity on this point but I think our adjustor treated us quite fairly on this issue (and I recall that I had the same impression 20 years ago).

Conclusion: Go slowly at fist. Think about what you may want to change. Make a plan. After all, this nightmare was made more palatable by the fact that we were getting new colors and adding some things here and there. And then keep track of everything!

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About Living Trusts

About Living Trusts is hosted by the Law Offices of Merwyn J. Miller, as your online resource center to help you explore these key issues, and others, regarding your estate.

Merwyn J. Miller, J.D.

  • Board Certified Specialist in Estate Planning, Trust & Probate Law
  • Co-Author of legal text book and of “Don’t Go Broke in a Nursing Home
  • Teacher of law courses at public and private colleges
  • Continuing Education Instructor for attorneys
  • Columnist for largest regional newspaper in San Diego County and professional journals for 15 years, Contributing author to the book “In Your Service: The Veteran’s Friend”
  • Masters Degree in Financial Services - Estate Planning

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