Commercial Insurance and Water Damage: Is My Business Covered?

Commercial Insurance and Water Damage: Is My Business Covered?

A study performed by The Hartford, one of the country’s largest insurance companies, showed the most common and most costly types of insurance claims affecting businesses. Water damage ranked number two on that list, outranked only by burglary and theft. Water damage also came in as the eighth most expensive claim, at an average cost of $17,000.
For business owners, water damage can be particularly difficult because most commercial property insurance policies have exclusions for certain types of water damage, leaving the company potentially exposed to the full cost of clean-up and repairs. Here at The Fell Law Firm, we have clients coming to our Dallas area offices regularly because their insurance companies denied their water damage claims.

Does My Commercial Insurance Policy Cover Water Damage?

When a business suffers water damage, the owner wants to know whether the insurance policy covers it. The unfortunate answer, like so many answers in the insurance world, is “it depends.”
Most policies provide some degree of coverage for “sudden and accidental” damage. This might include bursting pipes, sewage backups or other events. However, not all water damage is sudden; much of it happens slowly, over time, as a result of unknown leaks, maintenance oversights and other causes.
That slow-forming water damage is something insurance companies frequently try to exclude from coverage. The language they use is often something like, “We do not insure for losses caused by leakage of water occurring over a period of X days or longer.”

Dealing With the Adjuster and Denied Claims

As you might imagine, determining exactly how many days a pipe might have been leaking is not an easy task. Not surprisingly, insurance adjusters use that to their advantage when evaluating a situation. Adjusters frequently overstate how long a leak may have been ongoing in order to deny the claim and save the insurance company some money.
Often, if the claim isn’t outright denied, it will be underpaid. We advise business owners to get a second opinion from a public adjuster if your own insurance company denies your claim or offers a low settlement. A second opinion is highly recommended if your claim was denied due to any of the following:

  • Long, ongoing leak
  • Unrepaired leak
  • Preventable maintenance issue
  • Failure to mitigate damages
  • Burst or broken pipe caused by failure to keep electricity or heat in the building

Getting Help for Water Damage Claims

After sustaining water damage to your business, you don’t have a lot of time to spend fighting with your own commercial insurance company. Remember, your insurance policy is a contract. If you believe the insurer is not living up to its end of that contract, consider reaching out to an experienced lawyer for advice.
The Fell Law Firm has deep experience in commercial insurance litigation, including cases involving water damage and denied claims. Our attorneys can meet you, assess your options and advise you accordingly. Contact us today!

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