What Constitutes a Valid Insurance Claim

After all the recent rains this may be a good tip to keep handy for phone calls you will be fielding from homeowners for the next few months.   This information will let you know what constitutes a valid claim after a storm.  When Associations submit property losses to their carrier there can be confusion about whether a unit damaged by rain is covered or not.

You may already know, “flood” is excluded under all policies (unless separate flood policies have been purchased).  Flood includes heavy inundation of rain, water which backs up through sewers or drains, rising surface waters, etc.  Generally speaking, there is no coverage for rain damage (climatic conditions).  These are often referred to as “Acts of God” in insurance policies.

Accordingly, if there are heavy rains and a condominium building has water enter the dwelling causing damage to the interior, is there coverage?  The answer is maybe.

If the building is damaged by an insured peril prior to the rain and then the rain enters the loss should be covered.  In one example, let’s say wind gusts damage and open up the roof and before it can be covered or repaired, rain follows and enters the building.  As another example let’s say fire burns off the roof and rain enters prior to covering or replacing the roof.   In these two examples, the claim is actually considered wind or fire and both are covered losses including the resulting rain entry.

The problem arises when a roof or building exterior simply allows the rain to enter the dwelling from poor design, poor maintenance or poor installation.  If rain enters the building and causes damage, there would be no coverage.

One old example I used when teaching insurance is, “if you leave your window open and the rain comes in, there is no coverage.  If the window is closed and is blown open by the wind and the rain enters, there is coverage for the broken window and the resulting rain damage all under the covered peril of wind.”

Finally, we want to make you aware that liability claims can arise out of these types of losses. How?   When Associations are responsible for maintaining the roofs, a unit owner who suffered damage and had a claim denied could allege the Association failed to maintain the roof properly.  The unit owner may have a legitimate claim for liability property damage.  The good news is that if this claim is made against the Association, there is usually $2,000,000 or more in coverage with no deductible.