In February 2012, a flood occurred in the luxury house (with an estimated value of at least 1 million dollars) located in Tustin Valley, L.A. County. The homeowner, a male in his fifties, had forgotten about the water running in the kitchen’s island sink while he spent an hour washing his car on the driveway in front of the garage. When the homeowner remembered the water he ran to the kitchen, but the water had already overflowed the sink. As a result, the tile floor, cabinets and walls of the kitchen were water-soaked.
Hurriedly, the homeowner wiped up the water from the floor with a cloth, and then he contacted his insurance broker from whom he had purchased his home insurance. He thought the insurance broker would have the expertise needed to solve the problem.
It seemed the insurance broker advised the homeowner that, if he filed a claim with the insurance company, the compensation would be paid smoothly. He said the homeowner should just follow the insurance company’s process. For this, a staff person from the compensation unit of the insurance company visited the site and checked the damage situation with the naked eye. Four days after the occurrence of the flood, the insurance company compensated the homeowner in the amount of $16,000.00. The compensation was for drying and repair.
However, the homeowner who received the compensation didn’t start any repair work even one month after the flood and the last contact with this PA. The homeowner thought there would be no problem if he simply had the repair work done when he prepared to sell the house. Up until this point, the question is how the homeowner handled the flood situation according to the advice of the insurance broker.
Apart from that, the homeowner had the opportunity to contact this PA through the introduction of an acquaintance at the initial point of the flooding. The PA visited the site immediately and pointed out the following problems:
1) The flood damage inspection should not be checked by viewing a wall with the naked eye. It should be examined by tearing the flooded wall in order to determine the exact damage situation.
2) The wet area should be opened and dried immediately. Otherwise, the following problems will occur:
- If left unattended, the deterioration will spread around the wet timber area
- Depending on temperature and severity of moisture, the mold will spread to the air rapidly, posing the risk of respiratory and skin disease to the family.
- If the weather continues to be hot in the future, the deterioration will deepen and the mold growth will accelerate.
3) Once the compensation is received, the compensation payment record will be kept at the insurance company. Therefore, the homeowner should secure evidence that the compensation related home repairs are performed, so as to avoid any future problem when the house is sold.
4) Without immediate action for the flooding part, if the site is left unattended, even though the additional damage loss is revealed, the insurance company may not process any additional compensation with the reason of insured’s default of obligation provision; DUTIES TO REMEDIATE THE LOSS FROM FURTHER DAMAGE, this duties are listed on most of the homeowner and commercial policies.
5) Finally, the following is about the paid compensation of $16,000.00.
According to the field experiences of this PA, the compensation wasn’t enough to repair the damage. In the case of flooding, when looking at the interior of the site, the damage is may end up two or three times more severe than a naked-eye inspection of the exterior would indicate. Therefore, if the detailed inspection of the interior is made, the compensation may be up to $50,000, or two to three times higher than the compensation already paid by the insurance company.
The sad thing is that although the homeowner has asked for the PA’s help, the PA can’t do anything due to the problem of the insured’s default of obligation actions; DUTIES TO REMEDIATE THE LOSS FROM FURTHER DAMAGE. In other words, it’s likely that this case has already been closed by the insurance company.
I hope our readers won’t think lightly about an insurance company’s claim adjustment system. The insurance company’s claim adjusting department doesn’t deal with insurance policy holders using a loose system run by careless amateurs.
Please remember, too, that the PA does not work for the insurance company. Instead, a PA is one your side as an expert in property insurance claim adjustement.