Flood – Water Damage and Insurance Claims – Which to Submit & Which to Pay Out of Pocket

The adverse effects of water damage to your home in the event of a flood or other type of disaster can be devastating, especially if the damage is left untreated for any length of time. Regardless of the original cause of the water damage, mould, fungus, and serious structural problems due to rotting are all common after effects that will need taken care of immediately.

The Different Types of Water That Cause Damage

The type of restoration services needed will depend on which type of water did the damage, either clean, black, or gray. Although “clean water,” which would include instances of a pipe bursting in the home or a tub overflowing, isn’t as dangerous as flood water, often called “black water,” potential problems may still occur.

Next, let’s look at the total cost for repairs versus the amount of your insurance deductible. A typical homeowners insurance policy has a 0 deductible. If the water damage repairs fall below that amount, definitely pay for repairs out of pocket. If the water damage repairs are only slightly above your deductible amount, consider paying out of pocket anyway because insurance companies often look at frequency of claims. Having a series of small insurance claims on your policy may raise red flags, perhaps even being more likely to raise your premiums than a single large claim. In addition to raising alarms with your existing insurance company, these claims are recorded in a national database which is accessible by all insurance companies. Should you switch insurance companies, the new company will see a history of claims filed and price your premium accordingly.

Did you know that as soon as you call your insurance company about a water damage issue in your home a claim may be opened and recorded? Even if you are calling to find out if the damage is covered, if the insurance company opens a claim, the claim will appear as part of your claim history even if the insurance company is not involved in the repairs. Once again, your claims history is considered by future insurance companies, so be careful about calling the insurance company directly. Instead, call your insurance agent or obtain estimates from contractors before filing the claim.

Lesson 4: Keep fans and a dehumidifier handy
Once the water is pumped out or mopped up, proper air circulation is essential to dry out your basement and prevent mold growth. Ventilating the area with extra fans will help tremendously with the drying process. A dehumidifier is also a good idea for reducing the amount of moisture in the air.

Lesson 5: Add flood prevention to your seasonal to-do list
A few simple checks can help prevent disaster from striking. Make it a priority to examine your pipes each season, particularly when heading into winter, and perform any necessary weatherization. It is also a good idea to monitor your rain gutters to make sure they aren’t getting clogged.

Another example illustrates how states restrict certain types of water damage claims. In Texas, an insurance company cannot raise your insurance premiums or deny coverage for an appliance-related water damage claim if the following two conditions have been met:

• The damage was properly repaired and remediated
• The damage repair/remediation was inspected and certified

However, if three or more appliance-related water damage claims are filed in three years, then the insurance company can increase your premiums or deny coverage.

So, which claims should you pay out of pocket?

• Any claims that fall below your deductible amount
• Any claims that you can reasonably afford to pay that could potentially raise red flags with your insurance company

Which claims should you submit to your insurance company?

• Any claims above your deductible amount that are protected from rate increases under your state’s insurance laws
• Major claims where extensive repairs are necessary and paying out of pocket isn’t reasonable.

Since it’s advisable to pay many water damage claims out of pocket, consider raising your insurance deductible to 00 or more and receive the benefit of a large premium decrease. Put these savings into an emergency account for out-of-pocket repairs

Resource Author Francisco Rodriguez Higueras
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