Home Insurance Claim Settlement for Water Damage Questions

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A month ago in October, my quadplex in Atlanta, GA experienced some water flooding issues during tenant move out with significant damage to two units and minor damage to the third unit.The property manager was unable to pinpoint who or what caused the pipes to start flooding the units. Two of the units are vacant but the flooding soaked and ruined everything the walls, carpets, appliances throughout the rooms.

I filed a claim with the insurance company and they sent out an adjuster to inspect and provide a repair estimate. The itemized estimate came back at roughly $20k to repair all three units. My property manager, contractor, and I agree that this amount seems very low considering the amount of damage incurred. The contractor is quoting $25k to repair the two vacant units, and $9k to repair the occupied unit for a combined $34k. 

It's been roughly 3 weeks of negotiations with the insurance adjuster on the settlement amount. However, during this time the property manager recommended that I proceed with repairing the occupied unit to livable conditions and I agreed to $6k worth of repair work on the walls and flooring. 

The insurance adjuster in our last call has declined to increase the settlement amount and made the decision to send out the payment to me because he feels this has dragged on for too long. There is no written approval from me that I accept the repair estimates or settlement amount. 

Am I forced to accept the insurance settlement if I haven't agreed to receive payment?

Should I ask the insurance company to assign a new adjuster to my case, even if one of the units has been partially repaired?

Would a lawyer be helpful in this case or am I out of luck?


Thank you for taking the time to read through my post! 

Originally posted by @William Chen :

A month ago in October, my quadplex in Atlanta, GA experienced some water flooding issues during tenant move out with significant damage to two units and minor damage to the third unit.The property manager was unable to pinpoint who or what caused the pipes to start flooding the units. Two of the units are vacant but the flooding soaked and ruined everything the walls, carpets, appliances throughout the rooms.  

I filed a claim with the insurance company and they sent out an adjuster to inspect and provide a repair estimate. The itemized estimate came back at roughly $20k to repair all three units. My property manager, contractor, and I agree that this amount seems very low considering the amount of damage incurred. The contractor is quoting $25k to repair the two vacant units, and $9k to repair the occupied unit for a combined $34k. 

It's been roughly 3 weeks of negotiations with the insurance adjuster on the settlement amount. However, during this time the property manager recommended that I proceed with repairing the occupied unit to livable conditions and I agreed to $6k worth of repair work on the walls and flooring. 

The insurance adjuster in our last call has declined to increase the settlement amount and made the decision to send out the payment to me because he feels this has dragged on for too long. There is no written approval from me that I accept the repair estimates or settlement amount. 

Am I forced to accept the insurance settlement if I haven't agreed to receive payment?

Should I ask the insurance company to assign a new adjuster to my case, even if one of the units has been partially repaired?

Would a lawyer be helpful in this case or am I out of luck?


Thank you for taking the time to read through my post! 

I am a licensed public adjuster here in Illinois (sorry, can't help you in Atlanta..) and work mostly on exterior storm damage which certainly isn't as in-depth as water/fire damage claims. The insurance adjuster you get is luck-of-the-draw. Some estimate semi-close to reality, while others are WAY off. For example, frequently we are able to get at least 25% added on to the claim for items one would assume were included in the claim but were actually left off when an insured initiates their claim on their own. While other times, we've more than doubled a claim amount by renegotiating with the insurance companies. And not only do the insurance companies leave items off their estimate, but they are also know to underpay rates for work as well.

For something as complex as you describe, it'd be worth it for you to hire a licensed public adjuster in your state to advocate on your behalf. Most of the times they'll more than cover their own fee with the increase in your claim amount, and most have contractors they work with and will waive the fee if you work with that contractor (since they presumably have an ownership interest in that company as well). For claims like car crashes, its pretty cut and dry (they pay for full repairs), as are many smaller claims, but on these claims that require a general contractor, your claim will be underpaid every time because the insurance company knows you don't know any better that their estimate is just a starting point.

Not sure about your state, but sometimes the insurance company will give you the name of a contractor who will do the work for their quoted/approved price.  Did you ask the insurance company to tell you a company that will do the work for their price?  

Hi @Matthew Olszak , thank you for reaching out. 

Would a public adjuster have to do a secondary on-site inspection of the property?

My main concern is that I had a water remediation address the immediate flooding and a general contractor to start repairs on the drywall, insulation, trim/baseboards, and minimal repainting because my tenant elected to stay in the unit throughout the whole process. Although we have pictures of the damage before the repair process, most of it is probably covered up by now. 

I may have been unlucky with my insurance adjuster because he itemized different sections for each unit. For example, he quoted appliance repairs in the downstairs unit, but left it out of the upstairs unit. 

Hi @Lynnette E. , the insurance company allowed me to choose my own contractor for the repair. In this case, I chose to work with the contractor with my property management company. I've worked previously with my contractor so I know the prices he's giving is fairly accurate. 

Originally posted by @William Chen :

Hi @Matthew Olszak , thank you for reaching out. 

Would a public adjuster have to do a secondary on-site inspection of the property?

My main concern is that I had a water remediation address the immediate flooding and a general contractor to start repairs on the drywall, insulation, trim/baseboards, and minimal repainting because my tenant elected to stay in the unit throughout the whole process. Although we have pictures of the damage before the repair process, most of it is probably covered up by now. 

I may have been unlucky with my insurance adjuster because he itemized different sections for each unit. For example, he quoted appliance repairs in the downstairs unit, but left it out of the upstairs unit. 

As long as you've documented the damages sufficiently, there shouldn't be any issue. Especially since it sounds you and the insurance company agree that the damages are due to a covered loss. Sometimes there is a disagreement as to what caused the loss (water damage in your case),  and in those cases you need to make sure to preserve everything so it can be examined by the engineers.

In this case, I would equate your work to-date as putting a tarp on a leaking roof due to hail damage - you had to make these repairs to minimize expenses instead of potentially having to move your tenant into temporary housing, which would likely be much more costly. 

Also keep in mind that all damages might not be initially apparent. E.G. for roofing, we'll find the decking rotted in places, but we don't know that is for sure the case until the shingles are removed, and as such the insurance companies won't pay for it until we prove the damage exists. That means calling them up when we discover it and asking if they are going to pay for us to tarp it until they send out the adjuster or just accept our photos and pay for the repairs. In your case, quite possibly studs are water-damaged, or the electric conduit is now rusting, or insulation needs replaced, which wasn't anticipated on their initial estimate. Those items can be submitted after work begins but before "final" payment is made by the insurance company as a "supplemental". However, if you aren't experienced in this, expect the desk-adjuster (company adjuster who reviews your claim further) to outright deny that they'd ever pay for that, which is where either a highly-experienced contractor or public adjuster comes in handy to set them straight.

Originally posted by @William Chen :

Hi @Lynnette E., the insurance company allowed me to choose my own contractor for the repair. In this case, I chose to work with the contractor with my property management company. I've worked previously with my contractor so I know the prices he's giving is fairly accurate. 

Can you require that the insurance company provide a contractor that can fix the issues at their price in your state?

Or can your contractor look at the insurance quote and make a list of things he needs to do that are not on that list from the insurance company?  Then you can submit the left out things to the insurance adjusted as items they left out and ask him to add them or explain why they were left out, or appeal their decision to not include those items. 

Hi William. Sorry to hear about all the problems you are experiencing with your water damage claim. I am a public adjuster and licensed from VA to Fl including GA.

Whenever you have a larger claim such as yours, you definitely need to retain a public adjuster or prepare to handle the claim on your own.  If you handle it on your own, the first thing I recommend is to stop the damage from getting worse.  Turn off water, extract water and do the bare minimum so no further damage happens.  Document all of this and do not throw anything away.  Next you need to get your contractor out to inspect all damages and write a detailed repair estimate.  There are different classifications of water (clean, gray and black) depending on the source of the water and how long it sat until it was discovered.  The classification of water is going to affect the repairs that are needed.  When you have a detailed estiamate from your contractor, you can submit your estimate to insurance for their review.  Be prepared for pushback as this always happens.

I don't like to use the insurance companies contractors as they tend to not push for items for you, but rather go along with the adjusters numbers.  They know who can feed them more work.

I think it makes sense to document and repair the one unit to keep that tenant happy.  I would wait to start further repairs until the other units damages are covered.  Hopefully you have lost rents coverage that will pay you rent while the insurance company drags their feet.  Hope this helps!

Flood by definition is the inundation of two or more acres or two or more adjacent properties by the overflow of a body of water. This is not covered under a property policy, but is covered under a flood policy.

It sounds like you have a "back of of sewers and drains" since you cannot pinpoint the source of the problem. This coverage must be added by endorsement and may be limited or capped as to payout. Unless added in, it is frequently excluded.

Estimates are just that. They can be challenged.

William,
What is your agent doing to help you on this claim. They should be assisting you with this issue.

Do you know what the items that are different on the company and contractors quote. Is it Labor rates, material costs, or are there things missing.

If you are not able to resolve the dispartity you may want to inquire with your state insurance department and see what they can do to help.

Seek out an Independent Public Adjuster.  They work for you, not the insurance company.  I've engaged them more than once and while an attorney can help in some cases, these adjusters almost always hit a home run faster, better, cheaper.  Don't even think for one minute that just because you pay premiums, your insurer will treat you fairly without a fight.  

@John Mocker So far the agent has only managed the communications between myself and the insurance adjuster. She did manage to have another adjuster take a look at my contractor quote and said it was rejected because it wasn't in an acceptable format, i.e. there was lack of detail on the dimensions of the replacement items.

The issue is all three: material cost, labor rate, and missing items in the report. For example, the adjuster stated they use an insurance software to calculate the material costs vs the contractor using market rates for the material costs. 

I will need to look for a general contractor that has quoted insurance claims before or talk to a public adjuster to get a revised quote. 


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