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Your home insurance might not cover everything you think it does

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Today’s story has the potential to save you thousands of dollars, plus the cost of a hair transplant to replace anything you would have otherwise removed.

Homeowners expect home or business insurance coverage in the event of a major loss, and that’s what Southern California financial advisor “Jay” certainly expected in January of this year.

“Over a two-day period, my wife and I noticed a strange musty and damp smell, which we eventually traced back to the kitchen, finding an area near the damp dishwasher. A plumber was called immediately and discovered that the hot water inlet value under the dishwasher had ruptured and replaced it.

“It resulted in over $ 30,000 in damages. But since we had great insurance, I said to my wife, ‘Don’t worry honey, we’ve got you covered. I’ll phone the claim and bet the repairs will start in the next few days. ‘”

Jay couldn’t have been more wrong if he had tried. And, to make matters worse, they had been part of the same well-known company for over 30 years.

“Dennis, most of your readers would be in the same situation as Jay,” says La Jolla, Calif. Lawyer Evan Walker. His legal practice focuses on bad faith in insurance.

If you were in Jay’s situation, wouldn’t you assume your insurance policy would cover this loss of water damage? Most people would, but Walker knows better and explains:

“The way home and commercial property insurance policies are sold leads people to believe they have coverage for some of the more common types of damage resulting in horribly expensive repairs, when they don’t.” .

“Insurance agents use language that makes it seem like you’re covered for just about anything that is likely to happen, but rarely advise what the policy doesn’t cover.”

Jay immediately filed a claim with his home insurance company, one of the largest in America. The claims adjuster came out and his claim was immediately refuse! That’s right, when they needed their insurance the most, “Forget it!” Was the answer.

Why? Was it because the claims adjuster was intentionally trying to deny them the coverage they paid for? Not at all. The expert’s report stated, “Your policy excludes coverage against wear, tear, deterioration, rust, corrosion, latent defects and continuous or repeated water infiltration or leakage. “

“If a pipe suddenly burst while they were at home and phoning the claim, it would be covered. But a slow leak over a period of time, even when you have no idea what’s going on, is excluded in almost all homeowners and commercial property insurance policies, ”Walker said. “And the agents never tell you that unless you specifically ask for it.”

“You can get coverage for most losses that almost all home insurance policies don’t cover,” says Los Angeles insurance broker Karl Susman. In addition to operating his own brokerage, he testifies as an expert witness in agent malpractice cases.

Susman lists these coverages which are generally available as an additional endorsement on your policy:

  1. Hidden water damage, vapor infiltration or leak cover. “If Jay had that, the loss would have been covered.”
  2. Damage to utility lines / buried sewers. Covers damage caused by a sewer backup flooding your property.
  3. Equipment breakage insurance. Property insurance covers damage caused by a covered external cause, such as fire. Equipment Breakdown Insurance covers damage caused by internal forces, such as power surges, short circuits, mechanical failures, engine failures, or operator errors.
  4. Matching roof covering cover in good condition. Most insurance only covers the replacement of damaged sections of a roof, and the result can sometimes be unsightly. This rider will pay for the replacement of the entire roof, even if only part of it is damaged.
  5. Identity theft coverage. Most people think this is part of your standard policy. This is not and should be purchased as a separate endorsement.
  6. Ransomwear. The carrier will not only pay to get your system back up and running, but it will even replace the hardware if necessary.
  7. Colocation insurance. Planning to use your home for Airbnb? Your home cover will be suspended. But cohabitation insurance covers you while the guests are at home.

Susman concluded our interview by emphasizing, “A knowledgeable officer will write a policy containing these endorsements, but you must add them to your policy. They are not standard.

“Insurance agents and brokers are not legally required to tell you what coverage is available. You have to ask for them. If a carrier doesn’t have them, tell your agent / broker to buy one that does because you know these convergences exist. Don’t assume your agent is right when they say, “These things are not available. ”

The bottom line for Jay and his water damage claim? Well, I had his insurance policy reviewed by two attorneys specializing in bad faith claims denial lawsuits. Both agreed that the exclusions in his policy were valid and material. The company was not responsible. Lesson learned.

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