This week’s article is inspired by two of our loyal readers, S & H. Initials are being used because . . . it’s fun and reminds me of the show Gossip Girl. Also, S apparently didn’t love the pseudonym I had picked out for her.
We’ll start off with their anecdote and then use their story as a case study to review what we should be doing in regards to homeowners insurance (also referred to by the apt nomenclature “hazard insurance”).
Picture it, Sicily
Now, S & H live in a beautiful and cool ranch in the Ann Arbor area. They have two lively elementary-school aged children, big hearts and an ever-expanding collection of furry friends. Am I adequately setting this scene? It’s like a Norman Rockwell painting.
H recently decided to truly finish off their partially finished basement. We’re talking drywall, new luxury vinyl planked flooring and trim work for all. I even got in on the action, serving in an advisory capacity for laying the floor. (Translation: I stood around for half an hour telling them all the mistakes I made laying the same brand of LVP in our rental property and the trick to laying flooring without touching a measuring tape.)
H got that job done. He crushed it. The pictures looked fantastic! Those walls! That trim! The perfectly flat flooring! H was a master of the miter saw. I couldn’t wait to see the basement in person! Except . . .
**RECORD SCRATCH***
One day not long after this project comes to a close, S notices her kitchen sink isn’t draining. S calls in the local drain authority to get her sink back in working order. While working in the drain, the plumber realizes he’s seeing clay.
YES, you read that correctly. He’s. Seeing. Clay. For any plumbing novices among us, clay in pipes is so bad. In Michigan, that’s a big ole red flag that your pipe is BUSTED.
And folks, this pipe isn’t just broken, it’s cracked all the way along. Let’s take a look:
And below is the aftermath of replacing that pipe.
Now, S is my main source here, but I would imagine H is beside himself at the state of the basement floor. What happens next?
Okay, we’ve reviewed the setup for our case study. Now, let’s discuss homeowners insurance and the aftermath.
Know Your Policy
First off, you should know what’s covered by your homeowners insurance policy. I know, reviewing your policy is one of those adulting things no one really wants to sit down and complete. But you know what’s worse? Getting caught unaware when something goes wrong in your home.
If you want a full review of considerations for your homeowners insurance, you can go back to this article for a refresher.
In S & H’s instance, their homeowners policy WILL cover most of the repairs and the cost to get the basement back to how it was before it . . . looked like John Henry went to it with a railroad hammer. Homeowners insurance often covers damage that is the result of a sudden unexpected occurrence, but it won’t cover a claim resulting from negligence or lack of maintenance.
Accidental water damage that occurs as a result of a sudden, unexpected occurrence is often covered by policies. Water damage caused by flooding – not usually covered. You turned off the heat while you were on vacation and the pipes froze? Your negligence here is probably going to preclude a claim for insurance. Each policy is written differently and you should know what is covered by your specific policy.
S & H’s insurance is covering the demo, removal of the broken pipe and the new concrete over the replacement. Insurance will not cover the cost of the new PVC replacement pipe or the labor to install it. This piece of the puzzle is considered a maintenance cost, and thus, is not covered by insurance.
Adjusters Gonna Adjust
Now, where it starts to get dicey is the flooring because, let’s face it, insurance companies are generally in the business of making money, not spending it. I asked S about the flooring. Her response was “We’re still debating with the adjuster what they will cover on the flooring.” Oh, boy.
The adjuster required S to call the store where they purchased the flooring to ask if they could piece flooring into the gap that was ripped up to replace the pipe.
This is a floating click and lock floor. The whole point of this style of flooring is that you click AND lock it in successive rows so it all stays in one piece. (I may have used the words “dumb” and “ass” in my response to S. It was merited.).
So S dutifully called the store, who promptly laughed at her and told her they could not piece the two halves of the floor back together with new product. I’m thinking S is going to get a whole new floor, but she was still waiting on word from the adjuster.
Asking the Right Questions
How can you find out what is covered? You can pull out your policy and read it. If you don’t have a copy, log in to your online account to get one or call your insurance agent to request it. You can also ask your insurance agent to review what is covered under your policy.
You should also be looking for what isn’t covered by your policy. When I wrote my first article on homeowners insurance a few years ago, I realized my engagement ring and wedding band were not covered under our policy. I had literally been wearing it around town (and the world) every day for over a decade and these items were not insured. (My dad is totally hitting the roof right now.)
Was it a little bit of a hassle to get them added to our policy? Yes, I had to get them appraised and submit the appraisal to my insurance agent. But now, I have peace of mind that for the extra $75 per year the policy has me covered if those rings are lost or stolen.
Now, your insurance company probably offer riders (i.e. add ons) to your policy that you might not even be aware exist. Some companies will cover your sewer pipe or a sump pump backup for an additional charge. Review your policy and investigate whether it makes sense to add extra coverage.
If you have a finished basement, you will really want to review what makes sense for your coverage. Remember what it cost you to finish it the first time? Do you really want to pay that again?
Okay, so now we know why we should take a deep dive into our homeowners insurance. Let’s talk about another thing S & H did right.
Proof in Pictures
S& H documented the state of their basement before the issue. Now, did S & H document for insurance purposes? Nope, probably not. They took pictures because they were proud of the work and wanted to show it off. Either way, same result. They had proof to show the insurance company about the state of their basement before they had to tear it up with a jackhammer.
If your house went up in flames, what documentation of the contents do you have to demonstrate to your insurance company?
Photos. Video. Receipts. These are the way, my friends.
We have a friend who loves football. Football is his jam. Fantasy leagues, Sundays with friends, that’s what he lives for. To amp up his enjoyment of the NFL season, he has three large flat screen televisions in his basement. He knows this will allow for maximum enjoyment for him and his friends.
Our friend is also wise enough to know his insurance company might question whether he is padding his bottom line on a claim. So when he upgrades a TV, he takes out his phone and does a walk through to capture the contents of his man cave. If anything happens to the house, he has that video to demonstrate what items were physically in the home and need to be replaced.
Document the contents and state of your home. Save receipts for major items and renovations. Good record keeping can save you so much pain if something happens. We never think it will happen to us until it does!
Thanks for joining me this week! See you next time. As always, don’t hesitate to reach out with all your homeownering questions.
