Sudden and Accidental Water Losses
Insurers also reject such claims but examine and find evidence that supports coverage. What happens when an insured claims possible water damage from buckling floors but doesn't know the leak source?
The adjuster would mostly inquire whether a pipe burst caused damage. Suppose the insured response doesn't know the answer. In that situation, the adjuster would likely begin to collect evidence from refuting the argument because the damage was not caused by an immediate and unexpected plumbing failure protected by an all-risk policy. If an insured claims for water loss, what are the insurer's duties? What, if any, are the co-insured duties? And what acts (or inactions) the insurer takes pose questions of bad faith? What's a sudden, unintended leak? Often leak longevity is known.
There is an instance where insureds started finding condensation for a month on the windows before hiring a plumber to take care of the leak. He watched the water come from an open pipe hole, come out as a drip because the water was switched off low. Within a day or two, the insurance adjuster came to the home and examined and took photos. The adjuster observed persistent, noticeable mold and moisture on each level of the three-story home interior walls. The insured told another claim agent to watch condensation and mold a month before the claim. Within a week of the initial inquiry, the insurer refused the appeal because it was caused by a hole in a pipe that leaked over time and was thus not sudden and unintentional.
The insured opted not to argue whether the leak was unexpected and accidental. Instead, the insured argued the pipe's nanosecond split met the sudden and unintended insurance requirements. Interesting is the court's discussion of what constitutes a sudden and involuntary leak as follows, given the small size of the holes from which the water leaked. Since there was a large amount of water damage, the leak must have continued long enough, or stopped and started several times, to qualify as 'continuous' or 'repeated' under any fair construction of those words.
An example is where sudden and unintentional overflowing toilets, but a malfunctioning toilet that failed to shut down water intake and overflowed due to sewer line blockage was not protected due to exclusion for loss or damage caused by water backing up or flooding from the sewer.
A multi-month water leak is not. Ultimately, there was no coverage because the existence of the pipe's incremental water discharge (even if triggered by a nanosecond break in the line wall) and the accumulated effects of water on the house preclude any finding that the release was immediate.
Practical efforts to describe abrupt and accidental. Notes, whatever 'sudden' implies, is not incremental. There is much space for interpretation between discussing a pipe break's nanosecond, not cumulative. Insurers refuse coverage based on mold's appearance in the insured 's house, even if the mold could be unrelated to a broken pipe, resulting in the insured's claim or taking days to appear. Moreover, the insurer does not have a bevy of experts (think mold experts or metallurgists) ready to give opinions confirming the leak's long-term existence.
Even if a layperson does not usually use the words unexpectedly and inadvertently to describe a leak, insurers use the insured's inability to detect the leak as consideration toward coverage. Therefore, when documenting an argument, these words should be used or defined as to the absence of any prior water presence manifestations wherever possible. An insurer's obligation to investigate and provide adequate support. Among the duties are prompt examination and receipt of insurance claims.
Upon receiving notice of claim, each insurer should immediately do the following, but in no event more than fifteen calendar days later, unless the statement of claim received is a notice of legal action, begin any appropriate investigation of the request.
Often the insurer's obligation to investigate and the insurer's form of acts or inactions constitutes a contract violation. There's a case where the insured drove an automobile on the highway as it went off the road and fell into a 50-foot ravine. During the crash, a family member had caused them. He observed post-accident conduct. The insured was lucid, didn't worry about breathing difficulties, and didn't know why the accident happened.
The insured complained about cutting other observers on the scene to his head. In a government survey, the officer did not refer to cardiac arrest or attack. The paramedics arriving at the scene found the insured's blood pressure and pulse to be okay, and there was no sign of heart failure before the crash. After the insured's hospital admission of multiple wound diagnosis, the insured collapsed into a coma and died two days later.
The hospital staff was unsure whether the accident's trauma caused my predicted infarction or whether it occurred while the patient was driving the vehicle, triggering irregular heartbeats, syncope, and subsequent crash.
Under her husband's life insurance policy, the insured 's wife and beneficiary sought accidental death benefits. In its investigation, the Old Republic asked the doctor to complete the proof-of-loss method. In the article, the doctor noted that the insured 's death was due to an accident, indirectly attributable to a brain contusion, coma, and brain hypoxia. The illness or cumulative reading directly to his death was cardiopulmonary arrest with precedent causes being myocardial and atherosclerotic heart disease. A heart attack and accident-related injuries caused death. The Old Republic retained a third-party investigator whose inquiry consisted of reviewing the traffic accident report, the death certificate, some hospital records, the form of proof of loss, and a brief description of doctor records.
The Old Republic never approached any witnesses at the scene or the insured's doctor before denying the petition because the insured 's death was not due to illness and accident. Following the rejection, the insured's wife brought a complaint, and a jury found the Old Republic unreasonably refused to compensate for the insurance benefits. It granted extracontractual damages. The jury's decision was upheld on appeal. The appeal tribunal addressed the insurer's responsibility to investigate as follows. The question here is whether the Old Republic found all the information reasonably available while rejecting the argument and whether that information offered a basis for coverage. The Old Republic was responsible for examining the circumstances extensively to decide if the accident caused his death.
An insurance provider can not deny evidence supporting coverage. If it does, it behaves unreasonably against the insured and violates good faith and fair dealing. The Old Republic says it did not break the covenant of good faith and fair dealing because it received any current writing setting out the insured's cause of death. It argues these writings represent that the cause of death was the insured's heart failure, not the injuries he suffered in the car accident.
The Old Republic did not fulfill its obligation to collect readily available testimony from all percipient witnesses. The Old Republic knew nobody knew what caused the tragedy. No one ever addressed the matter while investigating the accident. The Old Republic adjuster did not recognize medical problems, and the Old Republic did not consult its doctor. Claims officials dismissed facts supporting coverage and did not fulfill their responsibility to investigate further.
The insurer must obtain proof supporting the allegation. A case illustrates an insurer's need to examine and find facts supporting coverage systematically. The obligation extends similarly to insurance claims for water damage, where an after-the-fact examination of the premises does not result in a conclusive response as to whether or not the leak was appropriate for sudden and unexpected policy requirements. In a claim for water damage and a pipe burst, the obligation to investigate promptly is especially paramount, where the cause of water damage is not evident.
The essence of that obligation is also complicated by the insured's duty to mitigate, i.e., avoid water flow if the damage to the leak continues. So in our hypothesis, where the insured finds any buckling of his floors and calls his insurer, the insurer's first reaction could be to advise the insured to employ a plumber to stop the leak. Although the insurance will cover damages from the leak, it does not cover the leak's actual repair, and the insurer has no obligation to include a plumber's name. Most policies do not cover the walls required to locate the leak source.
Many plans compensate for any opening if the loss is protected. On the other hand, the policies could cover emergency services required to dry the premises. Under any situation, and if the insured asks, the insurer must provide the insured with emergency providers' names to fix the harm caused by the leak. The remediation phase could include demolition of walls, removal of drywall, dry rot, etc., raising the issue of whether the insurer could perform its investigation before any dry-down, possibly destroying evidence that the insurer could later assert should have retained.
It can be argued that, despite the insurance company's insistence that the insured locate the source of the leak before performing its investigation, the state of the premises and the need to repair it immediately could require the insurer's immediate presence on the property at or around the time the leak is discovered to preserve and provide guidance to safeguard the leak. The possible tension between the insurer's duty to support and investigate and their lack of obligation to repair a leak under the policy raises significant challenges in a real-time situation where remediation facilities are on the insured's premises.
Their work involves decisions on what facts will need to be retained to justify coverage while ensuring that potentially hazardous materials are removed from the premises. Anecdotally, agents were known to blame the insured for removing drywall (which could indicate signs of mold and support denial of coverage) and failing to remove drywall (thus demonstrating an insured inability to mitigate).
If the insurer fails to investigate immediately, the insurer can have advice beyond saving the broken pipe. For example, did the insurer advise the insured to photograph the area around the line (or other leaks) sources for premature leakage signs? Did the insurer explain its standards of drywall removal or preservation? Or, conversely, should the insurer choose not to investigate immediately, should it be stopped from relying on subsequently collected and potentially damaged or insufficient proof in favor of a denial?
Plumbers and remediators need to note that insurers are likely to recruit experts to help denial of coverage. For example, the mold may prove the leak as this mold variant takes a long time to produce, indicating that the leak may be long-term. It can also be beneficial to take samples of the mold contained on-premises or airborne models before remediation to provide an alternate reason for the decline. The insurer relies on decay as evidence of a long-term leak.
Additionally, the level of moisture and the materials on-site may be factoring in accelerating mold growth. It can negate testimony indicating molds' existence confirms the long-term presence of the leak. This again increases the value of gathering proof of the premises' state before any remediation, which might be necessary to minimize harm to the insured. Also, the adjuster can proactively ask the insured if the water damage makes the whole or part of the home uninhabitable and, if so, inform the insured of his or her entitlement to benefits under the policy's Extra Living Expenses (ALE).
The ALE benefits kick where premises are uninhabitable or otherwise unsafe to live in awaiting repairs or inquiry. Since policies don't specify what's unfit, there is considerable space for interpretation. The insured has good claims about unfit or uninhabitable premises. Contaminants like mold, lead, or asbestos is found when small children or elderly adults live on the premises. The degree and nature of the effect of water damage on the premises (e.g., the kitchen) also play a role in deciding the habitability problem. Until the insured's right to ALE benefits is established, the insurer must provide accommodation equal to those enjoyed by the insured before the loss.
Consequently, if the insured was staying in a multi-million dollar home when the failure occurred, he or she might be entitled to hotel accommodation falling under the same high-end requirements. Not surprisingly, there are wide ranges of an insurer's ability to meet their policy's ALE criteria, and so ALE concerns are often extremely contentious. Conclusion While a water-damage claim can seem clear on its face, insurers vigorously contest any aspect of water-damage claims and frequently use the insured 's obligation to mitigate to escape their responsibility to investigate proactively. When the cause of water damage isn't unexpected and unintentional, insurers have a huge advantage to be portrayed when pursuing rewards under their all-risk plans.