By: Julie Shehane
Texans rarely see extended periods of freezing weather, and even less often experience heavy snowfall. As February’s winter storm hit, temperatures rapidly dropped, remained below freezing for days, and the Texas power grid experienced a huge increase in demand for energy to heat homes and businesses in the subfreezing temperatures. At a time when Texans needed energy the most to keep their homes warm, the power grid failed and left millions without electricity.
The results were devastating. Exterior pipes, as well as pipes in the interior of buildings with no heat, froze and caused them to burst, leak, and damage the interior of homes. Pool equipment froze and pipes busted, and many were left without water as a result of thousands of water leaks that occurred after the pipes began to thaw.
Consumers have many options apart from simply filing a claim with their insurer, including seeking shelter from the Red Cross and applying for Small Business Association (“SBA”) disaster loans, FEMA benefits, and other public benefits. Often FEMA benefits will apply where a homeowner has no insurance. Those who sustained damage and had property insurance in effect at the time, however, should be entitled to coverage under their policies depending on the type of damage suffered. Water damage from freezing pipes, in particular, is generally covered under a homeowners’ policy.
While the recent “Snowmageddon” in Texas has resulted in an abundance of insurance claims for homeowners that sustained damage to their property, water damage claims in general are one of the most common insurance claims. For example, for the years 2012-2016, water damage and freezing accounted for the second most claims and the third largest average homeowner’s insurance claim. The average amount for a water damage claim during this time frame was $9,633.00. This means that most insurers have provisions conferring coverage for water damage claims; but, there are exceptions.
Many homeowners’ policies will not pay for the actual cost to repair the pipe that froze and burst. Fortunately, the cost to actually repair or replace the pipe is typically far less expensive than the cost to repair and replace the property that sustained water damage. The costs to repair or replace pipes depend on where the pipe is, how many pipes were affected, and whether the plumber is charging an emergency fee. Coverage for the cost to repair or replace frozen pipes depends upon the precise language of each policy.
Most homeowners’ policies will cover the cost to repair or replace property that was damaged by water. For example, if a pipe in a ceiling froze, then burst and flooded the floor beneath it, the damage to the walls, ceiling, flooring, and any personal property typically is a covered loss. As noted, in this situation, only the cost to repair or replace the pipe itself may not covered.
Water damage claims do have limitations, however. It is important that the insured take action to protect his or her property and not have been negligent in maintaining it. For example, homeowners who leave their homes for extended periods of time and do not take action to ensure that their homes stay heated may have their claim denied. Insureds must take reasonable action to maintain the heat in their homes. With this recent event in Texas, many homeowners lost power because of the rolling blackouts; but, the loss of power and subsequent frozen pipes are not attributable to any negligence on the insured’s behalf.
Coverage for damage to pools and equipment depends on the precise policy language. Some policies merely exclude damage to pools, while others more broadly exclude damage to pools and all related equipment, such as pumps, filters, and pipes. For policies that exclude only damage to pools, the insured could argue that damage to the pool pump and related equipment is covered. That is, the pump and related equipment is not actually the pool, and if the insurance carrier desired to exclude damage to the pool and all related equipment, it could have stated such in the policy. Other policies specifically state that they do not cover damage to pools, spas, and all equipment, including pumps, filters, and pipes used for pools and spas.
If water damage renders a home uninhabitable, additional living expenses coverage is available. This type of coverage reimburses the homeowner for the expense of staying in a hotel, apartment, or suitable lodging while repairs are made to their home. It also may cover moving charges, meals, and other expenses incurred by the homeowner in having to move from their home and live elsewhere while repairs are made. Most policies have a cap on additional living expenses, and the coverage only is available for the amount of reasonable time it takes for repairs to be made to the home, such that it is suitable to be lived in again. This means that final touches, such as painting or fixture installation, may be still be ongoing when the homeowner moves back into their home.
The cost to have large drying equipment brought in, as well as the cost to dry and clean personal property and furnishings generally is covered under homeowners’ policies. The homeowner should take reasonable steps to prevent further damage to the property, however, such as shutting off the water supply, moving valuables away from the area sustaining water damage, and contacting the insurance carrier as soon as possible for names of reputable contractors that specialize in water damage mitigation.
Some homeowners’ policies may provide limited coverage for spoiled food caused by a power outage. Typically, the coverage is limited to $500 or less and should apply where the food spoiled due to a lengthy power outage not caused by the negligence of the insured.
Under every Texas homeowners’ policy, insureds should notify their carrier and file a claim as soon as possible. With catastrophic events, such as this recent winter storm in Texas, reporting the claim as soon as possible serves multiple purposes. First, filing the claim is a prerequisite to coverage under any policy. The carrier cannot begin to adjust the claim until it is reported.
Second, it allows the carrier to make recommendations as to water damage mitigation experts so that prompt efforts can be made to mitigate the damage. Third, in areas suffering catastrophic damage, the insurance carrier will be dealing with thousands of claims that are all filed in a short amount of time.
Filing the claim at the earliest possible time should place that claim ahead of later-filed claims. This means the repairs may be made sooner, the homeowner is forced to live away from the home for less time, and the claim can be resolved more quickly.
While this article discusses coverage under typical homeowners’ policies, the terms, conditions, endorsements, and exclusions in each policy dictate the coverage available under it. As a result, each policy must be carefully examined to determine any available coverage.