5 Things you Need to Know about Property Insurance Coverage

Happy New Year To All!

As a real estate investor or even a homeowner, knowing your insurance coverage is very important. The goal of every investor should be to make as much profit as possible while limiting liability.

Insurance Claim Tips You Need To Know:

1. If a problem at your property caused damage to the property of your neighbor, avoid agreeing to cover the repair cost unless your insurance agrees to provide coverage. Many condos and HOA’s have a clause in the governing documents that states that, “each owner and their respective insurance provider is responsible for damage done to their own properties regardless of the source of the problem.” The most common exception is in the event of Negligence.

For example: John’s water heater leaks and damages neighbor Sue’s townhouse, Neighbor Sue may be responsible for covering her own cost to repair the damage even though John’s water heater caused the damage.

2. Take lots of pictures for your records. A picture is worth a thousand words and in the case of a claim, it could mean the difference being the claim being approved or denied.

3. Act quickly and stay on top of your adjuster, the faster you place a claim, the more likely the insurance is to approve. The insurance adjuster is often over-whelmed with other claims so if you do not follow up, they may take along time to reach out to you.

4. You may not always need to place a claim. Placing an insurance claim, whether it is approved or denied by your insurance company, can cause your premiums to increase. One should be careful when placing claims unless the cost to repair, very clearly exceeds the insurance deductible.

For example: If Joe has a 3 level house. The upstairs bath leaks water and damages the ceiling of the living below. If your deductible is $1000 but the damage is less than $1000 worth of repairs, it may not be worth placing a claim.

5. Most insurance companies DO NOT cover the cost of plumbing repair. The homeowner must cover this cost on their own in most cases. They do however cover the cost to expose the problem and the damage caused by the issue.

For Example: The toilet bowl gets clogged and a bad toilet flap allows water to fill and over-flow onto the floors. This will likely damage the floor around the area, the tiles, drywall, baseboards etc… The insurance company will likely cover everything EXCEPT the cost to unclog the toilet (the damage is covered, not the plumbing source that caused the damage).

Some of the People involved in an insurance claim

Insurance company: Company that provides the insurance policy to the homeowner

Field Adjuster: The person that is assigned to physically inspect the damaged areas of the property and provide a report to the Insurance adjuster.

Insurance Adjuster*: Person assigned to the claim. They usually make the decision on whether a claim is approved or denied. They also issue the repair payments, collect all information and are the main point of contact through the claim process until completion

Mold & Mildew Remediation Company: Company that specializes in the treatment of water damaged and or fire damaged property (Key: They do not make repairs)

General Contractor: Person or company that makes the repairs to the property after the remediation is completed.

When in doubt, contact your insurance provider to make sure that you have adequate coverage and to ask policy specific questions.

Look out for our next post in a few weeks and we hope that you found the article informative!