Rental Property Damage -vs- Insurance Co -vs- utility company?

[copperkid3]

I'm not sure whether this is more of a case of seeking sound advice or just another form of commiseration on an awkward and extremely complicated set of circumstances. To set the stage, we have to start at the beginning and come forward in time; describing what has happened and is continuing to happen.
Back in 1980, I purchased a run-down single family dwelling and sunk every penny I had into the rehab and conversion of it, into a duplex; upper and lower apartments. During the course of events, I ran a bit short and borrowed enough to finish the project from my parents, but then had to move out-of-state and then later lost my job and ended up settling on co-ownership of the property with the folks......which worked out great because they managed the property and then at the end of the year split the receipts with me. Years have gone by and while we've had a few bad apples as far as renters go......the place has more than paid its' way.

The little hamlet that the property sits in, has ALWAYS had a problem with a high water table (hillside springs and water in basements thru-out the year) and along with that, poor wastewater,etc. disposal, with someplaces using the old WPA drains to run their septic system into......which then ran into the nearest creek which in turn ran into the nearest river and eventually into one of the Great Lakes. Back in the 70s, the DNR of Michigan got after the township and threatened them with legal action if something wasn't done about cleaning up the problem, but after reviewing their options and determining that it would bankrupt most of the villages' widows, ect.......they decided to sit on it and do nothing.

Fast forward to the present. The DNR not having much teeth during those lean years, the powers that be decided that the feds could better handle the problem and the DEQ got into the picture and came out taking samples and finally issuing a directive that SOMETHING had to be done NOW!!! Well.....actually this was over 8 yrs ago, but the acting township board (along with the county drain commissioner) decided that we needed to be tied into the closest centralized sewer system which is approximately 10 miles away. "Fortunately"......one of their main lines ended only 4 miles away and so it just remained to figure out how to pay for it to get it connected. Problem solved by forming 2 distinct sewer districts; one that actually had the problem and assess them for the next 40 yrs and then the other who had the main line going by their frontage. This past fall/winter, the contractor has been laying pipe into the ground and cutting pavement, sidewalks to get the stubs run to the property lines of each residence. I saw them digging up the sidewalks about a month and a half ago, but thought nothing of it......as we have no tenants in the property at this time. However, we were notified by our insurance carrier, that they would not be renewing our policy with our insurance broker after Dec. 19th and that we would need to find another insurance carrier to cover the property. The wife stated that she had found another company late last week, but due to the heavy snowfall the previous couple days, he would be unable to come out and take photos of the properties and asked if we could take some and email them to him? This was done last Friday (Dec. 19th!!!) and I noticed that on the south side of the building......massive amounts of ice covering the exterior of the doorway leading to the upper unit; along with ice covering the gas and electric meters!!! I also noticed green utility tags tied to the front and rear doors of the lower unit; notifying that due to construction of the sewer lines, the utility had been contacted to shut-off the gas to each residence, but that they would come back out and relight each gas appliance when notified by the residence. Immediately, I realized what probably happened. We have gas furnaces and gas water heaters to each unit. When the gas was shut off, the furnaces were too........and eventually with no one living there, the pipes and water heater froze and burst. Here's the problem.......I've notified the original insurance carrier, since it appears to have happened on "their watch", but they won't be able to come out until after this Monday to evaluate the damage and take my "official" statements. In the meantime, they strongly suggested that I contact someone that specializes in taking care of water damage; to minimize our losses and help prevent mold developing, ect. No mention that they would cover even this expense. No mention that they would go after the utility company. Basically, I'm in that great, grey area of insurance limbo........do they have liability; if so, how much? If not, why not and then who does? Looking for ANY words of wisdom; either BTDT or anything that may help in this case.

Note to Mods; if this isn't the best place to post this, please feel free to move it. Also, sorry for the length, but it is as it is.......and it could have been even LONGER!!!

[72bag]

contact http://www.texasccc.com/

even if you arent in texas, they deal with issues like this all the time and can give you some advice or refer you to a local attorney who can help.

[RedneckPete]

In my experience, making an insurance claim is NEVER worth your while.

I consider insurance an assurance against me loosing EVERYTHING, not an assurance against loosing something. Make a claim now and repay five times the amount over the next ten years.

Fix the joint and get it rented. Leaving the place vacant and not checking on it was a mistake on your part.

Pete

[copperkid3]

Originally Posted by RedneckPete

In my experience, making an insurance claim is NEVER worth your while.

I consider insurance an assurance against me loosing EVERYTHING, not an assurance against loosing something. Make a claim now and repay five times the amount over the next ten years.

Fix the joint and get it rented. Leaving the place vacant and not checking on it was a mistake on your part.

Pete

***************************
Unfortunately, some of us live hand-to-mouth and don't have the luxury of "extra" funds to do fixings like an unexpected flood damage. We barely have enough to scrape together the premiums for the insurance from year to year, and have had to let the taxes lapse.......if we don't find some extra cash soon......it will be moot whether we can fix it or not; the STATE OF MICHIGAN will take it back.

Your absolutely right about leaving the place vacant and not checking up on it.......this is the FIRST TIME in over 25 years that it has been vacant and it was something that we just never thought about before. In the past (when things were economically better) we didn't even have to advertise a vacancy; in fact, being such a small town, we usually found out that a tenant was planning on leaving when we started getting phone calls from prospective tenants inquiring because they heard that "so-and-so" was getting ready to move on.

Not anymore; everyone is moving out of town and you can't rent or even sell your property......no one wants the "added expense" of the sewer assessment and there's no work to be found either.

[Alice In TX/MO]

The insurance company is not responsible for this.

If it's your property and the water was left on and the pipes froze and then thawed, it's your fault. They don't cover negligence.

I know this because I did it once, right after I'd remodeled the house.

[arabian knight]

Well just depends on the set of circumstances and the insurance company too.
I had a break in, NO, I left the Door Unlocked (My Fault) and somebody "walked In" and took nearly 2K of stereo Equipment. And My Insurance paid for the stuff that was taken with no problem at all. But the point being is, I left the Door Unlocked, (My Fault) So really it was no a Break In, but I was still covered and they paid.

[sheepish]

copperkid3, Many insurance policies require that properties not be left vacant and unchecked or the coverage is void. exactly for situations like yours. Have you read your policy?

[Alice In TX/MO]

Thirty plus years of experience with many houses.... plumbing and break ins are two different things in the eyes of the insurance company.

[DAVID In Wisconsin]

I agree with Rose. I find it highly unlikely that insurance will cover these losses, all things considered. I've had my share of rentals and insurance claims.
You do have an obligation to take whatever steps necessary to lessen further damage, in the event that a claim is paid.

[haypoint]

Sometimes insurance companies cover stupid.
I had a chimney fire caused by me adding a MagicHeat to the stove pipe and then not keeping up on the resulting cresote build-up.
But, just like any other insurance, you'll pay it back in higher premiums. Since you are switching over to another carrier, they won't like the fact that you have had a recent claim. Even if you've gone 25 years without a claim, one recent one raises their eyebrows a bit.

As a rule of thumb, insurance companies pay out in claims 10 cents for each $1.00 they take in. That is for all insurances, car, home, business, etc. that is why every major skyscraper built in the last 50 years is an insurance company.

Someone ASSUMED that the heat was off and water in the pipes blown out. That is an angle you should persue if the insurance company doesn't cover it.

Hindsight is always 20/20. If you can't afford to cover that kind of damage, you can't afford to keep heat on in an unoccupied dwelling. Perhaps someone else can learn from this: Shut down unoccupied property, drain and blow out the pipes and make sure your insurance policy covers you when the place sits empty.

My house had a wood fired boiler, installed when the house was built in 1934. Inspected regularly. After 30 years with only one claim, 25 years ago, they told me that they were dropping me because I didn't have any other heat source besides wood. Instead of screwing electric heaters into the varnished original oak baseboards, I found a different carrier.

[copperkid3]

Originally Posted by Rose

The insurance company is not responsible for this.

If it's your property and the water was left on and the pipes froze and then thawed, it's your fault. They don't cover negligence.

I know this because I did it once, right after I'd remodeled the house.

************************************
Is it R E A L L Y all my fault? Perhaps you didn't read my post in its' entirety???
Granted the water was left on......but then so was the gas..........(or so I thought)
until the gas company came by and shut it off for the sewer construction a month and a half ago. Was it my fault for NOT INFORMING them to come back and relight the furnaces, even though I just found out about it last week???
I'm certainly going to contact the utility company.......that may be the ONLY recourse that I've got for any hope of recovery. But then they've got deep pockets and in the long run, we BOTH know that they can drag it out long enough that it won't be worth pursuing. Short of that, the simple math seems to be that it looks like it would be cheaper to just tear it all down, salvage and sell what we can out of it, and then fill in the basement and let the state have the vacant lot.

[Jena]

The utility company turned off the gas because the state (or whoever is doing the project) required it. It is not their responsibility to notify you beyond the tags provided and they are under no obligation to ensure the integrity of your property.

Most policies do not cover vacant properties.

I'd go ask a lawyer for some advice or talk to the state insurance commission. Read your policy. You might be out of luck. Bummer.

Jena

[agmantoo]

Here in NC the insurance companies require the landlord to notify the insurance company when the property is vacant. If that is the same situation in your area the insurance company will disallow any claims since you did not inform them.

[edcopp]

Deed the property over to the folks. Be happy with the deductions that you took advantage of over the years. Move on. This situation will get a lot worse as time goes on.

[copperkid3]

Originally Posted by copperkid3

************************************
Granted the water was left on......but then so was the gas..........(or so I thought)
until the gas company came by and shut it off for the sewer construction a month and a half ago.
I'm certainly going to contact the utility company.......that may be the ONLY recourse that I've got for any hope of recovery. Short of that, the simple math seems to be that it looks like it would be cheaper to just tear it all down, salvage and sell what we can out of it, and then fill in the basement and let the state have the vacant lot.

******************************
Thought I'd give ya'll an update on what has been transpiring. Had one of those companies that specializes in "flood damage, et al.", come out to give an estimate and since last nights' rain and major melt-off of most of the snow due to unseasonably warm weather.......we noticed something that wasn't visible before. There is a new trench that continues from the other side of the sidewalk where the sewer connections stop and goes on up to the gas meters. New pipe and new tags on the line.......it appears that when the utility company came out (for whatever reason) that they took advantage of the open trench and trench machine and decided it was time to replace the gas line to the residence. Will be contacting Consumers Power first thing Monday.
The water removal guys took a looksie; said they'd seen worse (guess that phrase is supposed to "help" in dealing with prospective clients) and said that they couldn't/wouldn't do anything UNTIL after I'd talked to my insurance adjuster. However, they were able to start to give me a ballpark figure of at least $2000 to extract the water from the carpets;(cheaper to just tear out the wet stuff and replace with new) with half of it paid upfront before they even begin and then the demolition of damaged interior walls to remove wet insulation, etc. which could run into the 10's of thousands of dollars!!! IT'S LOOKING MORE AND MORE LIKE THE OLD PLACE ISN"T WORTH FIXING AND WE'LL PROBABLY END UP TEARING DOWN, ANOTHER PIECE OF AMERICANA.

[rambler]

Originally Posted by copperkid3

************************************
Is it R E A L L Y all my fault? Perhaps you didn't read my post in its' entirety???
.

I understand how you feel.

A dwelling that is lived in by the owners has one type of risk with it.

A dwelling that is rented out has a different type of risk with it.

A dwelling that is not occupied has yet a different type of risk.

Insurance companies have been in business a long, long time, and they pro rate & charge for insurance based on the risk involved. Some companies are pretty forgiving and will toss money at you; others are real snooty and won't cover you even if they are supposed to be covering you.

Yes, this is your fault. It really is. A property with active utilities in a freezing environment should be checked every day or two. It is your fault for not checking your property. The _extent_ of the damage, which sounds kinda bad, is most certainly your fault.

That is beside the point tho.

Insurance coverage will depend upon the policy. Does it cover a vacent rental property? If at times you were working on it, living in it, renting it all out, leaving it totally vacant....

All these situations change how your building was covered by insurance, and probably should have been re-assessed by your insurance agent for a new policy.

Do any of us actually do this?

No, not many.

But, now you are where you are.

Seems like you were notified of something going on with your utilities with tags on the building?

Seems like you didn't care enough about the property to look at it very often.

Put all this together into one case, and I can see where you might have trouble getting a claim through.

But any individual situation is different. Maybe you should and will be covered, even if it is your fault. It all depends on the wording of that thick packet of insurance papers you get every year - what it says exactly.

With interest rates & investments down (which is what insurance companies live on) and vacant houses up, I will guess the insurance companies are in a period of really cracking down on this type of thing. In the good years when they were making a lot of money on investments and rising policy values, they might have been more in a let it slide & pay mood, to keep policies.

--->Paul

[DAVID In Wisconsin]

Let us know what the final outcome is. I'm curious. Good luck!

[KatSpradley]

Well in a nut shell...since it was not owner occuppied or a rental at the time unless you can prove that someone was there...they will not cover unless you just have dwelling coverage. Now...if you do have dwelling coverage, they will not cover contents. They are probably going to push you off to the city/govt entity that caused this which will result in the entity stating that they gave you notice at the residence which will probably thus result in the denial of the claim...sound like I have been through something similar with the insurance co? I had a lot of what ifs if my rental ever wasn't rented and so forth...I am glad I haven't had to deal with that yet...but hopefully that will not become an issue...