HO3 Policy Claim

[mandoo500]

Hello everyone,

I'm looking to obtain some insight into a claim that I am working on for a HO3 policy. About 2 weeks ago in NY, there were multiple heavy rains that ran across the city for a couple of days. One of my clients purchased their new home back in August and had the home inspected prior to the purchase. At the time of inspection, they were told that the roof was good for another 5 to 6 years so no updates were done on that part of the home. Instead, they did the interior, the basic stuff...painting, molding, flooring and such. Now when the rain started, at first there was no leaking...but when it got to the third day, rain leaked through the roof and down the walls and accumulated in the hood duct of the basement...thankfully the basement was spared. When the insured called a contractor to find the source of the leak in the roof, the contractor found that there were no plywood under the shingles...according to the contractor's theory, because the house was built during the 1920's and plywood did not exist, original owners basically nailed down the shingles to the frame of the roof...and consecutive owners did the same when it came time to perform updates...So my client has to re-do the roof totally as well as to fix the water damage to the whole house (re-painting, molding, flooring which were done previously prior to the loss. Now my questions:

1. Will the company cover the loss?
2. If covered, will they pay for the replacement of the roof?
3. What type of reasons can there be for the insurance company to deny the claim?

Thank you everyone for your input.

 

[djs]

Well, I would call the carrier and ask them. There is no clear answer with the information given.

A LOT of roof leaks are caused by lack of maintainence, which is the excuse carriers give to not pay a claim. Since they just had it inspected and this wasn't raised, they probably are okay with this.

The contractor is probably wrong. The roof has been there 90 years and didn't suddenly not have plywood. He is looking for a total re-roof job. I don't blame him, and this may be the real fix, but it's not the cause of the leak.

If it is a covered claim, the carrier will not pay for an entire new roof, they will pay only to repair the damage caused by the storm (i.e., the wind blew 10 shingles off, they replace those 10).

If it is a covered claim, then they should cover the damage that was caused by the occurance. For instance, mold probably didn't happen by the storm that just happened, this is more likely (if it exists) a problem from previous water issues. Of course, mildew is a different story.

Lots of reasons to deny this type of claim. I suggest being very familiar with the policy you sold them and what the exclusions are. Look at things like mold exclusions, wind driven rain, covered perils, etc. I know nothing about New York policies, so I can't help much there.

Dan

 

[joshb]

Well, I would call the carrier and ask them. There is no clear answer with the information given.

A LOT of roof leaks are caused by lack of maintainence, which is the excuse carriers give to not pay a claim. Since they just had it inspected and this wasn't raised, they probably are okay with this.

The contractor is probably wrong. The roof has been there 90 years and didn't suddenly not have plywood. He is looking for a total re-roof job. I don't blame him, and this may be the real fix, but it's not the cause of the leak.

If it is a covered claim, the carrier will not pay for an entire new roof, they will pay only to repair the damage caused by the storm (i.e., the wind blew 10 shingles off, they replace those 10).

If it is a covered claim, then they should cover the damage that was caused by the occurance. For instance, mold probably didn't happen by the storm that just happened, this is more likely (if it exists) a problem from previous water issues. Of course, mildew is a different story.

Lots of reasons to deny this type of claim. I suggest being very familiar with the policy you sold them and what the exclusions are. Look at things like mold exclusions, wind driven rain, covered perils, etc. I know nothing about New York policies, so I can't help much there.

Dan

I agree with Dan, except on one thing, the insurance company should be replacing the entire roof if they cover the loss, as I'm sure the local codes have changed and require plywood underneath of the shingles. Local Code may not allow them to just replaced whats damaged. This part should be covered under ordinance or law coverage.

There is a lot that goes in to a claim like this so its definitely not going to be cut and dry.

 

[insurance1822]

The sudden and accidental water damage should be covered. If wind or hail damaged the roof/shingles then those portions will be repaired. If the roof didn't face any damage & just leaked because of poor integrity/maintenance.....well then that's on the homeowner to address. If a wind/hail damaged some shingles, the insurance company (most likely) will only replace THOSE shingles and chances are the color won't match entirely. Some companies will tack an endorsement that says if it doesn't match entirely...they will then replace the whole roof.

I see a claim being paid for the water damage...and an "ehh maybe" on the shingles. Also..chances are the policy language has the wording to deny this claim. I'd read the policy, consult with a claims advocate and advise the insured accordingly. These leaky roof situations are never easily black and white. Good luck.

 

[djs]

I'll give Josh the ordinance and law piece, if there is coverage on the policy for this AND there is an ordinance that requires it. For a minor roof leak repair though, it is doubtful that the ordinance will require a full update. Ordinance coverage varies drastically by where you are. From what you wrote, it would not be required for the damage, just if the city says they have to replace it to get a permit to fix the damage. Then, even if you provided coverage for ordinance and law, they could potentially run into coverage limit issues, depending how much of the structure they end up replacing to account for this.

As you can tell, there is just a whole lot of unknowns.

Let us know how it turns out. Personally, I hate these types of claims. Roof blows off, it's easy. Tree falls into the house, its easy. Rain leaks through the roof and it gets a lot more complicated on how it will be handled.

Dan

 

[FLInsa]

Is there coverage? Absolutely yes. Nothing on an HO3 policy says otherwise. Will the carrier replace the entire roof - that depends on the adjuster/carrier.

 

[djs]

Lots of language in a standard HO-3 policy to say they won't pay this claim. Florida might have some different rules, but the 'standard' HO-3 policy has lots of outs for leaky roofs, unless damage was done to the roof in the storm.

Lets look at an example:
Using the HO-3 policy posted at http://server.iii.org/yy_obj_data/binary/748905_1_0/HO3_sample.pdf
Go to page 9 of the pdf, which lists things that are NOT covered for dwelling.
Paragraph 6:

(6) Any of the following (not covered)
(a) Wear and tear, marring or deterioration
(b) Mechanical breakdown, latent defect, inherent vice, or any quality in that causes it to damage or destroy itself (i.e, the plywood problem)
(f) Settling, shrinking, bulging or expansion, including resulting cracking, of bulkheads, pavements, patios, footings, foundations, walls, floors, roofs or ceilings

Any of these can cause an issue for this type of claim to not be paid. Whether these statements exist in a New York HO-3 policy, I have no idea.

In my experience, leaks by themselves are almost also viewed as lack of routine maintainance. Doesn't really matter what carrier you use. Most leaks start out small with virtually no damage. For it to damage floors (in one rainstorm) requires a fairly major leak, or other storm damage. If there is other storm damage, then it is more likely a covered loss.

From your statement, I assume Florida has different rules, which would be great. In California, roof leaks, without other damage, are a tough sell as a claim.

Dan

 

[FLInsa]

Lots of language in a standard HO-3 policy to say they won't pay this claim. Florida might have some different rules, but the 'standard' HO-3 policy has lots of outs for leaky roofs, unless damage was done to the roof in the storm.

Lets look at an example:
Using the HO-3 policy posted at http://server.iii.org/yy_obj_data/binary/748905_1_0/HO3_sample.pdf
Go to page 9 of the pdf, which lists things that are NOT covered for dwelling.
Paragraph 6:

(6) Any of the following (not covered)
(a) Wear and tear, marring or deterioration
(b) Mechanical breakdown, latent defect, inherent vice, or any quality in that causes it to damage or destroy itself (i.e, the plywood problem)
(f) Settling, shrinking, bulging or expansion, including resulting cracking, of bulkheads, pavements, patios, footings, foundations, walls, floors, roofs or ceilings

Any of these can cause an issue for this type of claim to not be paid. Whether these statements exist in a New York HO-3 policy, I have no idea.

In my experience, leaks by themselves are almost also viewed as lack of routine maintainance. Doesn't really matter what carrier you use. Most leaks start out small with virtually no damage. For it to damage floors (in one rainstorm) requires a fairly major leak, or other storm damage. If there is other storm damage, then it is more likely a covered loss.

From your statement, I assume Florida has different rules, which would be great. In California, roof leaks, without other damage, are a tough sell as a claim.

Dan

Dan, you're correct except you're assuming that the leak originated because of wear and tear which according to the OP that does not appear to be the case.

Quoting the OP: "...find the source of the leak in the roof, the contractor found that there were no plywood under the shingles...". I am not a GC buuuuut, that may be why the roof leaked (?).

So now the question really is, will the carrier consider the roof to be "defective construction" and the burden would be on the carrier to prove so.

 

[djs]

If the source of the leak is no plywood (which I doubt actually), then it may be classified as a latent defect and would not be covered.

The general contractor proved it was a construction defect by saying the leak was caused by the way the roof was built. Still, if it was because of the no plywood issue, then this roof has been leaking for 90 years.

What probably happened, in my opinion without seeing the roof or even being a qualified contractor, is the boards they used to support the roof are old and dry. During the prolonged rain, they swelled due to moisture, causing some buckling, allowing some gaps for rain to come in. This still shouldn't happen, but if you have plywood, there is much less chance for these gaps to occur.

If my theory is correct, then it still wouldn't be covered due to section (f) of the post above.

Now, since the roof was just inspected a few months ago, hopefully by a licensed contractor, the case can be made that this was unknown, not a maintainence issue, and should be a covered loss. I would argue this, not sure how successful it would be though. Without the inspection, unless there is other storm damage, it would likely not be a covered loss in California by most carriers.

Again, for the record, I can't speak to New York, I am not licensed there, and do not have any practical knowledge of policies or claims handling.

Dan

 

[Chubb Marketing]

It was actually quite common, and appropriate, in the early part of the 20th century to install a wood shake roof with no plywood underneath. Doing so allows air flow around the shakes so that they can dry following a rain storm, thus extending their life by reducing the accumulation of mold/rot.

From a carrier's perspective, if the roof was not damaged by a covered loss (such as hail or windstorm), then only the ensuing water damage to the structure should be covered by the policy.