A friend of mine who’s in the water, fire, and smoke damage servicing business asked me to talk with one of his client’s last week. The client was a first-time home buyer and needed some advice on how to deal with a home insurance claim for 6 leaks beneath his slab foundation. His homeowner’s insurance policy was woefully inadequate to deal with the claim as it didn’t have the right coverage added to it.
He shared his story with me. As a first-time home buyer, he reviewed the home insurance quote from the carrier he has his car insurance with and determined it was too expensive. He talked with another home insurance agent and stated he wanted the “cheapest policy” available. He got that, but as it turns out, he wished he’d paid more to purchase a couple of options which would have helped him.
All home insurance policies have a variety of options available, but it’s up to the buyer to confirm they are included and avoid the fate of this home buyer. Here are 4 options I believe all homeowners should have.
Water Damage: Most policies provide some level of coverage for damage caused by a water leak. The coverage is usually limited to “sudden and accidental” leaks such as a pipe bursting, an appliance leak, a ruptured water heater, etc. There may be a dollar limit, so I recommend at least $25,000 in coverage and more if it’s available. It takes more than most people realize to replace wood flooring, sheetrock, etc. that’s damaged by a significant water leak.
Slow Leak: A few home insurance companies provide optional coverage for damage caused by a slow leak. This type of leak usually occurs under appliances or sinks, behind walls, or around pipe joints and often go undetected until hardwoods warp, tiles pop, or mold grows on sheetrock because they are hidden from sight. If the option is available, I highly recommend it.
Sewage Backup: Having sewage back up into your home is a nightmare, and most home insurance policies don’t include coverage for it. Clean up requires a hazmat team which is why I recommend this coverage which is expressed in a dollar amount.
Foundation Coverage: Texas soil has a high clay content which expands when we have rain and contracts when we don’t. While damage to the foundation due to soil movement isn’t covered by any home insurance policy, damage caused by leaks under a foundation from water supply lines is covered.
This option provides coverage to access (cutting through the slab to get to the leak) and egress (filling it back in and tying it into the existing slab). Anyone with a slab foundation should have this option.
What was missing from the homeowner’s policy was foundation coverage. If he had it, most likely his policy would have covered the damage to the home caused by the leaks beneath the slab. He succeeded in saving a few hundred dollars in premium by buying the cheaper policy, but he’ll be out at least $15,000 to make the repairs his home now needs. What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!