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Jon Fletcher
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Burst Pipes at Multi-Family - Filing an Insurance Claim

Jon Fletcher
Posted Jan 7 2023, 06:54

Hi guys, I just closed on a vacant three-family property right before the holidays. I went there last night and realized that there were two burst pipes, with water gushing from the second floor down to the basement. Any insight on the best way to approach the insurance company? The policy was just bound in mid-December. We're still assessing the damage. 

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Cameron Moore
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Cameron Moore
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Replied Jan 7 2023, 08:39

Just call to make a claim if you think the cost will be worth it, they will have their adjusters make sure that there was not any pre-existing damage. You do not, however, want to make a claim if the damage is $5k when you may have a $2500 deductible. 

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Bill Brandt#2 Creative Real Estate Financing Contributor
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Bill Brandt#2 Creative Real Estate Financing Contributor
  • Investor
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Replied Jan 7 2023, 09:30

What Cameron said. I certainly wouldn’t make a claim under $5,000 and I might not make one under $10,000. Especially if you were going to remodel these units anyway. Make sure the heats working and turned on since the pipes shouldn’t have burst just because the unit was empty, you don’t want more pipes bursting. 

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Jon Fletcher
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Jon Fletcher
Replied Jan 9 2023, 13:11

Unfortunately the damage was pretty extensive. Without having had a plumber or contractor weigh in yet, the damage is probably in the $15k range, with a deductible of $2,500. I've never filed an insurance claim before, so I'm wondering will this negatively impact my premiums for my other rental properties. 

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Aaron Porter
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Aaron Porter
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Replied Jan 16 2023, 07:45

@Jon Fletcher  The short answer is. Maybe, maybe the claim will effect your premiums going forward.  Usually one property doesn't effect the others but insurance carriers are able to see your total portfolio, kind of, and they are able to see the claims history on any given property.  

So the underwriters are able to look through and see how many claims you the property owner has made on your properties, and how many claims have been made on the specific property whether it was owned by you or whomever before.  

However just because you have a claim that doesn't mean that your carrier is going to raise the premium rates on the property that had the claim or any of your other properties. 

This HUGE maybe is what gives huge importance for every investor to have a good relationship with a good insurance agent.  

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Michael Jacobs
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Michael Jacobs
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Replied Jan 17 2023, 07:21

My recommendation if you are not familiar with your policy like the rest of the nation you might want to hire an adjuster. They will be able to tell you how to squeeze the most out of your policy.

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Mohammed Rahman
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Mohammed Rahman
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Replied Jan 17 2023, 08:36

Hey @Jon Fletcher sorry to hear about your situation, it happens in the course of doing any kind of business in real estate! 

In my experience, you should approach the insurance company as you would with any other type of claim. It's not as if you're trying to mislead them by bursting the pipes yourself. I haven't ever hired an independent adjustor myself as someone else in the comments has mentioned, but it could also be a route to consider.