Case Study: Is Damage Due To A Busted Pipe Covered By My Insurance?

Busted Pipe Causes Damage

Nothing is worse than that dreaded phone call in the middle of the winter from the water company that water is pouring out of the side of your vacant rental property or shore house. Imagine rushing out only to find that a busted pipe on the second floor resulting in the entire second and first floor being damaged. Not to worry, as you have insurance! You call your insurance company and an Insurance Adjuster meets you at the property the next day. The Insurance Adjuster informs you that you need to have a contractor rip out everything that is wet, as you have a policy obligation to protect the property from further damage. The Insurance Adjuster informs you that you should send them the invoice for the emergency work.

The Insurance Adjuster sends you a formal documentation request demanding that you prove to them that the heat was being maintained in the property, or that the water supply was turned off. The Insurance Adjuster puts you on notice that since the property was vacant, if the heat was not maintained, or the water supply was not turned off, the Insurance Company will not pay for the damages from the busted pipe. And so the battle with the Insurance Company begins.

Our office was recently contacted by a Landlord who had this happen to them, only their case was a little more complicated. They had a tenant who was supposed to be living in the property, in which the Landlord was attempting to get the property back via an eviction filing. In the state that the loss occurred in, an eviction filing can take several months. The tenant was responsible for maintaining the heat. In this case, the heat was oil, not gas. Therefore, without knowing the name of the oil delivery company, it would be impossible to provide a bill confirming that oil was being delivered. The loss was discovered by the Landlord driving by the property to see if the tenant had move out yet. In this case, the tenant had moved out, but it was not possible to tell when the tenant moved out. The Landlord explained that they were not able to get the Insurance Company to settle their claim since they could not obtain the oil invoice, or confirm when the tenant moved out. The Landlord feared that the Insurance Company was about to deny the busted pipe claim. With a completely damaged property and no rental income coming in, the Landlord feared they were headed for a bankruptcy.

Our office was hired to assist them with their claim. We reviewed the file and we were able to determine that the Insurance Company, because the loss had occurred in February, falsely assumed that the water loss was the result of a frozen pipe. Our office conducted a site inspection and inspected the damaged pipe at which time it was discovered that the water loss was the result of a broken pipe that had deteriorated, not a pipe that froze. For this policy, the requirement of maintaining the heat was only required in the event of a frozen pipe loss, not in the event that a pipe deteriorated and broke. The policy issued to the Landlord was what is known as an all risk insurance policy meaning that the policy covers anything that happens to the property, except those items which are excluded. This makes a big difference because the Insurance Company has the burden of proving that an exclusion applies. In this case, since the Insurance Company could not prove that the damage was the result of a broken pipe, the claim was covered and we were able to get the Landlord paid for their damages.

Often times our office sees claims which were denied or delayed because the claim was either reported incorrectly by the Insured, or the Insurance Company made certain assumptions without properly investigating the claim. This is why it is always best to hire a Public Adjuster to handle your claim from the beginning.