Water damage to a residential home or commercial property is a routine problem in Texas, and one type of claim then that insurers often find ways to underpay or try to deny. Power outages in freezing weather may cause a pipe to burst or shoddy workmanship and appliances may fail to allow water to be released throughout a property. Those types of water damage are typically covered by property insurance. If you own a building or home in Texas and have accidental water damage, working with a property damage attorney can help you obtain full compensation quicker and ensure you are treated fairly or else hold the insurance company to account for its bad faith.
Consult With a Water Damage Insurance Attorney in Dallas-Fort Worth
Has your water damage claim been denied, delayed, or underpaid? If so, Wright Commercial Litigation is here to help. The firm has experience representing clients that have suffered water damage to commercial property from frozen water pipes in recent Texas winter storms, as well as water soaking throughout a home or business due to a broken water heater or faucet. Contact a Dallas-Fort Worth water damage attorney at Wright Commercial Litigation to schedule your free initial consultation.
The Types of Loss Involved in Water Damage Claims
The reasons why water damage may accidentally occur in a home, business, or commercial property are numerous but routinely can include:
- A toilet, faucet, or shower overflowing (especially upstairs)
- Failure of a water heater or air conditioning system in the attic that releases water
- Appliance breakdown, such as a refrigerator’s water line
- Freezing weather that causes a water pipe to burst
- Water backup from a sump pump or related equipment
The harm which can result from escaped water includes:
- Damage to ceilings or walls when water runs down from a second floor or attic
- Damage to flooring, carpets, or foundation by pooling above or below the surface
- Damage to structural material, such as rafters or support beams
- Damage to the electrical system
- Damage to insulation in the attic or between walls
- Damage to personal property and contents
- Mold growth
Any type of harm that results from water can be covered by property insurance policies, up to the limits stated on a declarations page. Some policies cap the payout for water damage or mold at a lower amount than other coverages in the policy, but there still may be recovery possible for things like debris removal, drying out the property, business interruption or lost rental income, and costs necessary for additional living expense or alternative business arrangements. The one thing typically not covered in a water damage claim is repair or replacement of the pipe or appliance itself. (And, to be clear, water damage caused by flood or other severe weather is typically excluded from most ordinary types of property insurance. You would need a separate flood policy to cover those perils.)
Ways That Insurance Companies Try to Deny or Underpay a Claim
Insurance companies are for-profit business enterprises. They make money by predicting risks and charging premiums they think will pay all covered losses with enough left over to keep as profit, but have to contend also with competitors offering lower prices. When the underwriters turn out to be wrong, there is pressure to make more profit, or an unexpected spate of losses occurs, insurance companies often then start to look for ways to cut the payouts. A recent example comes from the winter storms in Texas.
For claims based on water damage, an adjuster may assert that your loss is not covered or limited in some way by telling you that:
- You failed to maintain heat in the home during freezing weather
- You failed to “drip the faucets” (particularly if unoccupied or heating failed)
- It was the power company’s fault and you should sue them
- Your appliance broke down due to ordinary wear and tear that is not covered
- Your home has old pipes or a type of pipe not covered by the policy
- Mold remediation is not covered
- The water damage was due to your failure to maintain the property
- Your property was already damaged before the water overflow
Insurance companies cannot deny claims simply because they do not want to pay. They have a binding contract to pay your valid losses and cannot act in bad faith to deny or limit their obligations. They have to investigate and appraise fairly, and pay promptly. When insurance companies do not follow the law, an insured may be able to—after giving notice—bring a lawsuit seeking to recover up to treble (three times) the loss, statutory interest, and attorney’s fees.
What to Do if You Have Water Damage From a Burst Pipe or Failed Appliance
Soon as you discover water damage to your home, business, or commercial property, the first step is to do whatever you immediately can to stop more damage from occurring. All insurance policies will contain an exclusion or limitation for damage that occurs after you reasonably could have done something to mitigate the loss. If, for example, a faucet is broke and you find it overflowing, you should immediately shut off its water source under the sink. Other types of problems—such as a burst pipe in the attic—are harder for most persons to figure out how to stop. In that instance you should immediately call your insurance company, landlord, and/or a professional to come on an emergency basis to help. Most larger insurance carriers can offer to get a professional in their network on site soon as possible to stop escaping water and even start the drying out process to prevent mold from forming. The point is to do whatever you reasonably can to stop the problem and notify the appropriate persons (insurance company and landlord if renting) and protect the property otherwise, including by moving personal items.
Your next step after calling the insurance company is to cooperate with any efforts it makes to assist, inspect, investigate, and repair. Failing to do so can be a reason some expenses or claims get denied. Keep your cool at all times, be completely honest, and make sure to request anything you are being told to be put in writing as well.
At the same time it is important to document everything about the loss fully as you can. Take pictures and videos of all of the damaged areas and cleanup efforts. For example, if water damage spoiled food, take pictures of the food before you throw it away. Make sure your videos or pictures have timestamps or data to show when done as well. Gathering this evidence will help you prove that you took all the proper steps to prevent further harm and are not making anything up. If you are forced to stay in a hotel or eat out while damage is repaired, make sure to keep all receipts (and seek prior approval of the insurance company too). If the broken pipe occurred at your business location, make sure you document all lost profits and additional costs incurred by not being able to run your business as efficiently (or at all).
Most often you will have control over who does the repair. Be wary of blindly using professionals that the insurance company offers (and it is generally false if they say you are “required” to use an insurance company’s preferred providers) without first considering getting other quotes. It can be beneficial in many instances to use insurance company’s providers, but just be aware that sometimes those persons have developed a bias towards the insurer so that they stay in good graces to be on the list of who is called for future repairs. If something seems wrong or fishy to you, do not hesitate to contact other independent professionals to get quotes or verify. Be mindful of any deadlines the insurance company informs you about as well though—such as requiring repairs be done by a certain deadline stated in the policy—as delaying too long can result in recovering only a lower ACV (“actual cash value”) rather than full “replacement cost” (also sometimes referred to as “depreciation”) if that is what your policy provides.
Look closely before accepting any final “settlement offer” from the insurance company. It may be too low and not cover all damages. For that reason it is recommended you discuss your case with an attorney soon as possible. Often, when an insurance company sees an attorney represents the insured, they are more likely to offer a fair settlement at the start.
Refusing to Renew a Residential Insurance Policy or Increasing Premiums Based on a Past Claim Can Be Illegal
Texas law prohibits an insurance company from refusing to issue a residential (including tenant, renters, or condominium) insurance policy, refusing to renew such insurance, or increasing premiums based solely on the fact of a single prior valid water damage claim, if the was damage was properly repaired or remediated and certified as such. Even more protection is given for water damage claims related to appliance failures, as the insurance company cannot use that unless there are three or more such paid claims within a prior three-year period. That applies both to the person making claims (i.e., if they owned different properties) and to the property itself (i.e., multiple claims by different owners at the same property).
Specifically, Sections 544.303 and 544.353 of the Texas Insurance Code makes it unlawful to use prior mold or water damage claims to made a decision on whether to “issue, renew, or cancel” a policy, or as a basis for determining the “rate to be paid” for insurance coverage.
Several other prohibited forms of discrimination or usage of prior claim information is covered by Chapter 544 and can be the subject of a deceptive trade practices claim also (such as Section 544.254 making it illegal to not insure a church property based on a threat of arson).
The Benefits of Working With an Attorney for Your Water Damage Claim
Insurance policies are complicated documents. Even the insurance company may not fully understand all provisions—some smaller carriers use only an industry standard “ISO” form they did not actually write—and it takes an attorney to make sure you get every benefit under the policy. Other times adjusters are trained to subtly deny or limit payouts whenever possible.
At a minimum, your insurance company must promptly investigate and fairly appraise all of the loss resulting from water damage. The adjuster or other professional sent out to inspect is supposed to confirm the damage occurred and cause, then assess the fair value of all that was lost. Unfortunately, some adjusters do not fully account for the damage or give it an unreasonably low value (at least to start). They essentially put the burden on you to demonstrate their assessment is improper before they will act. Having an attorney involved early on makes it more likely the insurance company acts more reasonably. But, even then, sometimes they do not care and an attorney will at least make sure all your rights are protected so you do not unknowingly waive or lose the ability to assert additional damages later on.
A “public adjuster” is another option that can be helpful as a counterweight to the insurance company’s adjuster, to make sure the valuation is properly done and complete. But keep in mind that public adjusters typically work on a contingency basis which can result in taking a fairly significant chunk out of your recovery and, unfortunately, they cannot then be involved in any formal “appraisal” process that may be required by your policy. Also, if the public adjuster is unsuccessful, you still have to hire an attorney who will take either an additional contingency amount or require hourly payment. It is often better to consider hiring an attorney willing to work on a comparable contingency or hybrid basis up front, or use a public adjuster only when there is a significant dispute over how much loss occurred and you are headed to a formal appraisal process initiated by either you or the insurance company under the policy terms.
No matter which route you take—handling a claim yourself, hiring an attorney, or engaging a public adjuster—Texas property owners need their water damage claims resolved promptly, as any delay can result in even greater loss from toxic mold or increased rental costs and lost business. When you work with Wright Commercial Litigation, you will receive early assessment of your policy and diligent efforts to get your water damage claim paid in full soon as possible. If you have already been denied in full for a valid claim, then an attorney is the best person to help you potentially recover additional remedies. In particular, when an insurance company acts fraudulently or in bad faith, or does not promptly pay a claim that cannot reasonably be disputed, then you may have right to treble damages and increased statutory interest.
Discuss Your Water Damage Claim or Case with a Dallas-Fort Worth Commercial Contingency Attorney
Wright Commercial Litigation is experienced with property insurance claims in McKinney, Collin County, Dallas County, and Denton County, and is here to help small businesses, property owners, homeowners, and other policyholders with receiving full compensation from their insurance contract. When an insurance company fails to live up to its side of the bargain, you may be able to recover additional damages provided by law.
Contact the firm here to request an initial consultation on your water damage insurance claim.