Homeowners expect their home insurance to cover any type of accident but that's no longer true. Each year it seems like there are more exclusions, and then for some things you have to buy an extra rider. Even more confusing is when you have work done by a contractor. When there's an accident while the work is being done, it's hard to determine whose insurance is responsible.
I recently wrote two articles after a handyman client who's pipes had burst. It was Saturday but she was scared because she coudn't get a plumber to come out right away (too many burst pipes). I talked her through the steps to follow, Burst Water Pipes & Waiting for the Plumber. Later I wrote about what you need to do to Avoid Frozen Water Pipes in cold weather.
Another friend called me (lives in another state) for advice given my knowledge about construction, houses and common repair problems. He wanted insight into the tangled web of insurance claims.
Whose Insurance Covers What?
My friend's furnace was only 3 months old so anyone would assume it was under warranty. The company who installed the furnace had to make several trips to his home to identify the problem(s). They ordered the required parts and ultimately installed everything at no cost to my friend.
Unfortunately there are still significant costs related to the secondary problems caused by a plumbing failure, in this case burst pipes. Water does an unimaginable amount of damage when the water floods the house. It ruins flooring, baseboards, walls, furniture and more. His home owners insurance covered everything except for his deductible that he had to pay.
The question is why is this homeowner paying a deductible for a new furnace which failed? and why is his insurance claim record marred due to a failure on the part of a manufacturer and/or installer? That's why I got the phone call. Many of my customers call for advice on how to handle problems and some involve insurance claims.
Very few home owners have experience dealing with insurance companies. The first time they file a claim they're at a loss as to what to do. Sadly that's what the insurance company wants. Your insurance company's top priority is to pay out as little as possible. Sadly, with all their experience, they won't do anything to help you restore your home or get back to your normal life. The simple truth is:
- Homeowners are responsible for the deductible they committed to when signing up for insurance.
- Only you, the homeowner, will find and manage the resources to make repairs and restore your home back to it's pre-loss condition.
- Homeowners will end up with an insurance claim on their record for five to seven years, similar to driving tickets. Here's a little more insight into how this might affect your homeowner insurance costs after an accident.
Homeowners might wonder why they're penalized when they did nothing wrong.
Owning a handyman has taught me quite a few lessons about negotiating with insurance adjusters (another article coming soon). Customers came to me for help with repairs but often, the discussion expanded to include dealing with the insurance company. Where my handyman business had all work done by employees covered by my insurance, my friend's situation involved sub-contractors.
That meant tapping into my business owner network. I called a builder who works primarily with subcontractors. Here is the advice I received from him about which insurance company pays.
Which Insurance Company Pays?
The insurance claim process isn't easy to understand if there's only one insurance company involved. When there are multiple insurance companies, your (homeowner) insurance company should handle negotiations with the other companies on your behalf.
- Your insurance company will send out an insurance adjuster to review the source of the problem to make a determination as to the cause. The adjuster will also take photos and measurements to create an estimate of the repairs needed. If the claim is large, the insurance company may also send an industry expert to analyze the fixtures that caused the problem.
- A faulty furnace should be the responsibility of the manufacturer. An installer who sells you the unit is making a profit on the furnace, so they should include some type of warranty to install replacement fixtures. The heating company has more experience and buys a lot more HVAC systems so presumably they have more clout with the manufacturer.
- An installation problem should be the responsibility of the installer. Their insurance (what is known as general liability coverage) would be responsible for covering the added costs of repairs they cannot perform like plumbing, repairs to home's structure (floors, walls, etc) and furniture.
- The home owner's insurance can provide temporary coverage, and presumably they might need to pursue liability on behalf of the homeowner. This is important as the home owner should not be penalized for an accident outside their control (they didn't buy or install the new furnace).
Need more information about homeowner insurance?
- What Homeowner Insurance Do You Have? and Need?
- The Right Way to Buy Homeowners Insurance
- Talking to Your Insurance Company After a Flood
- Homeowner Insurance Inspections Because …
- We've got lots more articles on our Homeowner Insurance page.