Handling Water-Damage Claims
After Water Damage | Protecting Your Home from Future Water Damage | For More Information or Assistance
(August 2011)
Water damage to your home can be expensive and time-consuming to repair. The clean up could be worse if you don’t remove water or wait too long to clean up.
Homeowners insurance policies don’t cover all types of water damage. For example, some policies may not cover damages caused by sudden and accidental water leaks or sewer back-ups. Companies might also require inspections and certifications after certain types of water damage is repaired. It’s important that you read your policy carefully to understand your policy’s coverages and dollar limits.
After Water Damage
Any time you have water damage, it’s important to stop the water flow as soon as possible. Remove standing water and begin drying the area to prevent additional damage. If you can’t remove the water and dry the area quickly, consider calling a water extraction company. Keep any receipts from the clean up. Your insurance company may pay you back if you take steps to prevent additional damage.
Move wet items to a dry, well-ventilated area. Pull up soaked carpeting and wet rugs as soon as possible. If you must move items outdoors, place them in a secure area to protect them from theft.
Filing an Insurance Claim
If you think you have a water-damage claim, notify your insurance company as soon as possible. There should be a toll-free claims number for your agent or company on your policy. Most policies require you to notify the company in writing, so follow up with a written notice. Be sure to include any facts related to the claim.
The following tips can help the claims process go more smoothly:
- Review your policy to make sure you understand what losses are covered and what losses are excluded by your policy. If you’re not sure, ask your agent or an insurance company representative for an explanation. You can also visit the Office of Public Insurance Counsel (OPIC) website at www.opic.state.tx.us to find coverage summaries for most homeowners policies sold in Texas.
- Have your policy number ready; you will need it any time you write or call your company. Be prepared to answer questions about the damage.
- Take pictures or videotape the damaged area and any damaged property before you make any repairs. This is important because it can help you document your losses, especially if you clean up or make any repairs before your insurance adjuster has seen the damage.
- Don’t throw away removed or damaged materials until your insurance adjuster has seen them.
- Make reasonable and necessary repairs to protect your home and property from further damage. Don’t make large structural or permanent repairs until instructed by your insurance company.
- Keep an accurate record of all repair expenses and save all receipts.
- Keep an activity log, including a record of everyone you spoke with at your insurance company. Note the time, date, name of the person you spoke with, and a description of the discussion. Keep copies of letters or other documents you and your company send each other.
Claims Process
Most insurers will call or write you within one business day of receiving your claim. The insurance company may tell you about its claims handling process and any responsibilities you have under the policy.
The company must start investigating your claim within 15 days after receiving written notice. However, the company may ask you for more information. Once you send the information, the company has 15 business days to accept or reject your claim. If the company agrees to pay, it must do so within five business days. If the company rejects your claim, it must explain its reasons in writing. If you have an active water leak – such as a plumbing leak – the company will probably verify that you have shut off the water and have called someone to repair the leak. While the insurance company can assist you by providing a list of qualified specialists, you may select a plumber or contractor of your choice and are not required to choose someone from the company list.
Your company is required to
- Provide you with the name of a contact person who will monitor your claim
- Send a company representative or adjuster to your home to see the damage. If your damage was caused by a natural disaster or similar catastrophic event, it may be a while before the area is deemed safe and an adjuster is able to see your home. When the adjuster inspects your home, it’s a good idea for you or a family member to be there to make sure the adjuster knows about and inspects all damaged property, and to provide information or answer questions.
- Notify you in writing to tell you if your damage is covered by your policy and provide you with an initial damage estimate. Keep in mind that the initial estimate may change.
About Adjusters
The person you deal with most often during a claim will probably be your adjuster. There are several types of adjusters.
- Company adjusters are full-time employees of the insurance company.
- Independent adjusters are independent contractors who provide claims services to insurance companies. They usually charge the insurance company a fee for each claim they handle.
- Public insurance adjusters are independent insurance adjusters and do not work for the insurance company. A public adjuster may be able to help you negotiate your claims settlement with your insurance company, but be aware that public adjusters charge a fee. The fee is usually a percentage of the claim and is subtracted from any settlement you receive from your company.
Adjusters must be licensed by the Texas Department of Insurance (TDI). To learn whether an adjuster is licensed, call the TDI Consumer Help Line or visit our website
1-800-252-3439
463-6515 in Austin
www.tdi.texas.gov
Settling a Claim
Once the company agrees to pay all or part of your claim, it must pay within five business days. If you don’t get your check within five days, contact your agent or company. If you believe that the company is delaying payment on purpose, contact TDI for help.
Most companies pay homeowners claims with two checks. The first is issued after the adjuster reviews your loss and is for the estimated cost of repairs, minus depreciation and your deductible. A deductible is the amount that you must pay out-of-pocket before the company will reimburse you for your loss. Review your policy or ask your agent or adjuster if you’re unsure of your policy’s deductible.
The company will issue the second check for the balance of your claim after it receives the contractor’s bill for the finished job, as long as the repairs or replacements are completed within 365 days of the date of loss. You may submit a written request for an additional 180 days extension.
Important! Some policies only provide actual cash value coverage. Actual cash value is the replacement cost of your property minus depreciation. If your home is destroyed and you only have actual cash value coverage, you may not be able to completely rebuild.
Replacement cost is what you would pay to rebuild or repair your home, based on current construction costs. Replacement cost is different from market value and does not include the value of your land. Some companies also offer extended replacement cost coverage that pays a certain percentage over your policy’s limits to replace a damaged home.
Read your policy carefully to know whether it offers replacement cost coverage or actual cash value coverage. If your policy provides actual cash value coverage, you may be able to buy an endorsement to increase your coverage.
Most insurance companies will initially pay for a loss on an actual cash value basis even if you have replacement cost coverage. The company will pay any additional costs after the property is repaired or replaced.
The insurance company will pay to repair your home with materials of like kind and quality to the original. For example, if the damaged area was carpeted, the insurance company will pay to replace the damaged carpet with carpet of a similar grade and quality. If you choose to upgrade the carpet or change the type of flooring, you will have to pay any additional costs yourself.
If You Have a Complaint
If you have a complaint about the way your claim is being handled, first talk to your insurance company. Complaints are often caused by misunderstandings or miscommunication.
If you cannot resolve the dispute directly with your company, file a written complaint with TDI. You may file a complaint in several ways:
- on our website at www.tdi.texas.gov
- by e-mail at ConsumerProtection@tdi.state.tx.us
- by fax at 512-475-1771
- by mail at
Texas Department of Insurance
Consumer Protection (111-1A)
P.O. Box 149091
Austin, TX 78714-9091
For more information or to request a complaint form, call the Consumer Help Line. You can also access the complaint forms online at www.tdi.texas.gov/consumer/complfrm.html.
Additional Living Expenses to Relocate
Your insurance company will pay your additional living expenses (ALE) if you must temporarily move from your home while repairs are made. ALE includes temporary housing, food, and other essentials.
Ask your insurance company if your policy includes ALE. If it does, you may be able to get an advance ALE payment to help you move. Most policies pay 10 to 20 percent of the amount of the dwelling coverage on your house for ALE.
Your insurance company will only pay for additional living expenses up to your policy’s ALE dollar limits. Because repairs on your home can sometimes take months, you should monitor your expenses carefully to ensure that you have adequate ALE to cover the entire time you will be out of your home. If you reach your policy’s ALE dollar limits before your home is fully repaired, you will have to pay the remaining expenses out of your own pocket.
To help you control and monitor your additional living expenses, it may be helpful to
- Monitor your spending. Keep documentation and receipts for any expenses. You can ask your company to tell you how much of your ALE provisions you’ve spent and how much is remaining.
- Understand which expenses your insurance company will reimburse. Your insurance company will pay some, but not all of the costs to allow your family to maintain its normal standard of living. Some items might not be covered. For instance, if you relocate to a hotel, your company may reimburse you for meals out. If you relocate to a house or apartment with a kitchen, dining out expenses may not be covered. If you have pets, your company will probably pay any pet deposits you incur or may pay to board your pets if you are unable to take them with you.
- Get a written plan of action from your remediation contractor that includes a timeline for completing repairs. Monitor the contractor’s activities to ensure that work is completed on time.
- Budget your ALE based on the time it will take to complete the remediation or repair. If your contractor estimates that the remediation and repairs will take four months to complete, you could be out of your home for six months or more. If your policy has an $18,000 limit on ALE, you should make sure your additional living expenses don’t total more than $3,000 a month. Keep in mind that if additional damage is discovered during the remediation, it may take the contractor longer to complete the work than originally estimated.
- Discuss the timing of recurring bills, such as rent or a mortgage payment, with your adjuster to ensure that bills are paid on time.
- Consider using vendors or companies who will bill your insurance company directly. If you relocate to a hotel, try to arrange for the hotel to send the bill directly to the insurance company.
Coverage for Mold
Molds can begin growing within 24 to 48 hours of a water leak. Stopping the flow of water and drying materials as soon as possible reduces the chances that mold will grow. Your insurance policy allows you to protect your damaged property from further damage by moving it out of your house.
Most insurance policies will only pay to remove mold if it must be removed to repair or replace property that is damaged by a peril the policy covers. Some companies provide a limited amount of mold remediation coverage and other companies will allow you to purchase additional coverage for mold remediation by endorsement.
If you’re not sure whether you have coverage for mold remediation, ask your agent or an insurance company representative. You can also visit the Office of Public Insurance Counsel (OPIC) website at www.opic.state.tx.us to find mold coverage information for most homeowners policies sold in Texas.
Companies and individuals who assess mold damage and remove it from homes must be licensed by the Texas Department of State Health Services (DSHS). Property owners may make mold assessments and clean up mold on their own property without a license.
Mold assessors and remediators must meet certain qualifications, have required training, and pass a state exam before receiving their licenses. You can learn whether a company or person is licensed by calling DSHS or visiting its website
1-512- 834-6600
www.dshs.state.tx.us/mold/
Certification Required for Certain Types of Claims
If you hire a mold remediator, all repairs and remediation must be inspected. The remediator must also give you a Certificate of Mold Remediation (MDR-1) by the 10th day after the work is done. The certificate is proof that the mold has been removed and the cause of the mold is fixed.
If you don’t have a certificate for the repairs or remediation, an insurer can deny you coverage in the future based on previous mold damage or claims. If you sell your property, the law requires that you provide the buyer with a copy of all certificates you have for that property.
If you have damage resulting from an appliance-related leak repaired, you need to obtain a Certificate of Appliance-Related Water Damage Remediation (WDR-1). The certificate verifies that the damage was properly replaced or repaired and that any related physical damage was properly remediated, repaired, or replaced. If you do not have the repairs or remediation certified by a WDR-1, an insurer can deny you coverage in the future based on previous appliance-related damage or claims.
Protecting Your Home from Future Water Damage
Inspect your home regularly for possible signs and sources of indoor moisture. After it rains, check for water stains or odors inside your house. Establish a maintenance schedule to check the following sources of water leaks on a regular basis and contact a service company with any questions or concerns:
- Hot water heaters. Hot water heaters may rust or develop cracks over time. Check your water heater for rust and deterioration every year. Check the drain pan for water and ensure that the drain line for the overflow pan is not clogged. Drain and clean the water heater as recommended by the manufacturer.
- Garbage disposal. Routinely check for cracks or other sources of leaks.
- A/C drain lines. Damage can occur when the line that drains condensation from the evaporator coils becomes clogged and water overflows from the drip pan. Periodically check the drip pan for water and consider an annual service call to reduce the buildup of algae and mold in the drain line.
- Indoor and outdoor pipes and faucets. Routinely check indoor pipes under cabinets and sinks for leaks, rust, and any signs of deterioration. Minimize the potential for water damage from frozen and broken outdoor pipes by insulating supply lines (in attics, crawlspaces, and exterior walls), protecting exposed outdoor faucets, sealing gaps in exterior walls, and maintaining adequate heat in your home.
- Appliance hoses. Broken hoses are among the most common causes of water damage. Regularly inspect hoses and hose fittings on washing machines, icemakers, and dishwashers for kinks, cracks, bulges, or deterioration. Replace standard rubber washing machine hoses every two to five years or more often if they are showing signs of wear. Consider using steel-reinforced hoses for longer life.
- Showers, tubs, sinks, toilets, windows, and doors. Water leaks around bathtubs, showers, sinks, and toilets can cause damage because the leak is often out of sight. To prevent leaks, make sure you have a watertight seal of caulk around tubs, sinks, toilets, tubs, shower stalls, windows, and doors. Cracks or mold on caulk or tile grout may indicate that you do not have a watertight seal. Remove all caulk or grout, clean and dry the surface thoroughly, and apply fresh caulk. Do not apply new caulk or grout on top of the old materials.
- Attics and ceilings. Routinely check for wet insulation and water stains.
- Wallpaper. Routinely check for bubbling, peeling, and stains.
- Roofs. Keep roofs free of debris that can damage roofing and allow water to seep in. Trim tree branches to prevent them from rubbing and damaging the roof. Repair missing or damaged shingles. Properly seal any cracks around chimneys, skylights, and vents. Check metal flashing for holes, cracks, or other damage. Replace flashing or use silicone caulk to seal any openings.
- Rain gutters and downspouts. Direct rainwater away from your home. Keep gutters clear and make sure downspouts are long enough to carry water away from your foundation. Gutters that are filled with leaves and other debris allow water to back up on the roof, which can result in water damage to eaves and roofing material.
- Sump pumps. Sump pumps are the first line of defense in preventing water from seeping into basements. Periodically check the sump and remove any debris that could clog the pump. Consider installing a battery-powered backup to protect your basement during power outages.
- Weep holes. Weep holes are openings at the foundation level of a brick wall that allow moisture to escape from behind the wall. Do not close or block these openings.
- Landscape. Yards should slope away from the house to prevent puddling near the foundation or under pier and beam houses. Do not allow sprinklers or sprinkler heads to soak the exterior of your house.
Other Precautions
- Know the location of water valves. Make sure everyone knows where the main valve is located and how to turn the water off.
- Monitor utility bills. An unusually high water bill could signal a water leak.
- Turn off water before traveling. Turn the water off at the main valve or directly on major appliances. Consider leaving a house key and contact information with a neighbor or trusted friend and ask the person to check the inside and outside of your home periodically while you are away.
For More Information or Assistance
For answers to general insurance questions or for information on filing an insurance-related complaint, call the Consumer Help Line between 8 a.m. and 5 p.m., Central time, Monday-Friday, or visit our website
1-800-252-3439
463-6515 in Austin
www.tdi.texas.gov
For printed copies of consumer publications, call the 24-hour Publications Order Line
1-800-599-SHOP (7467)
305-7211 in Austin
Help us prevent insurance fraud. To report suspected fraud, call our toll-free Fraud Hot Line
1-888-327-8818
To report suspected arson or suspicious activity involving fires, call the State Fire Marshal’s 24-hour Arson Hot Line
1-877-4FIRE45 (434-7345)
The information in this publication is current as of the revision date. Changes in laws and agency administrative rules made after the revision date may affect the content. View current information on our website. TDI distributes this publication for educational purposes only. This publication is not an endorsement by TDI of any service, product, or company.
