Insurance Claim- need advice

[Kyle Kipka]

I have a rental property located in Minnesota and recently got a call from my tenants informing me of a severe water leak from the hot water heater that was going on for up to several weeks while they were on an extended vacation.

It appears that a part of the hot water heater broke and was allowed to pour out water continuously until the water was shut off. After submitting a claim with insurance on my HO6 policy (this is a town home and the outside is covered by the association's insurance). I had a remediation crew come out to remove the water damaged areas, suck up the water and dry everything out.

The insurance adjuster then came out to record everything and just sent me an estimate for the damage of about $4700 (minus the $500 deductible). I was surprised it was so low as there is a lot of work to be done and having remodeled two other homes in the past I feel that it cannot be brought to the original condition for that price especially considering labor costs form a licensed contractor.

What kind of recourse do I have to contest this low amount? As of right now my plan is to get 2-3 bids from licensed contractors (which I estimate to be in the 8-10K range with like materials) and then submit that to my insurance company but I'm still not sure what my rights are in a situation like this in my state since they plugged everything into their formulas to calculate price. Any ideas on how to handle best handle this?

I don't intend to cash any check or sign anything agreeing to this amount until I know more although they are also required to cover lost rent so I do intend to cash that separate check since that amount is clearly defined.

[Jonathan Bombaci]

Find a contractor that will work directly with the insurance company. There is no need for you to be involved. It is the insurance companies job to make you whole again, if you hire a contractor that is used to working with insurance companies then they'll do the job that needs doing and work with the insurance company to get paid.

I had a similar situation with a roof a few years back. The insurance company gave me an estimate of about $5,000, I hired a licensed roofing contractor to do the job and it came in closer to $9,000 when it was all said and done. They negotiated with the insurance company for the difference and I was pretty much left out of it.