Floods Force Insurance Flap

Posted January 18th, 2010
by HomeownersInsurance.org Staff (no comments)

floodingSometimes, it just doesn’t pay to have city services.

Take, for example, Stephen Reitter of Framingham, Mass. After having his basement flooded with wastewater two times over the course of eight months, the man is considering filing a lawsuit against the town.

An ice storm last December was the first trigger. During the severe storm, Reitter’s basement flooded with several inches of sewage. This damaged three finished rooms in the basement of the home. Reitter called the Framingham Department of Public Works, who indicated that the line from his home to the street must be clogged and ought to be snaked in order to prevent it from happening again.

The man’s homeowners insurance provider took care of the damages from that flood, totaling just above $25,000. The repairs were finished on June 15, and Reitter believed at that point that he should be in good shape.

On July 7, just 22 days later, a rainstorm hit the town. Wastewater once again overflowed from the toilet and the bathtub in the basement. This time, however, all six rooms in the basement were covered with several inches of sewage.

Once again, the Department of Public Works was called. This time, they determined that the backup was caused by a blockage of the town’s drainage system. The blockage was cleared the next day.

Unfortunately, the town’s insurance company has been less than helpful in the way they’ve handled the second flood. While the town did take responsibility for the second flood, blaming the backup on municipal pipes, the insurance company for the town hasn’t paid the entire repair bill.

The insurance company is a third-party insurer, which means that they will only compensate the actual cash value of losses. First-party insurers will usually cover the replacement cost after a loss, but premiums are higher, too.

Reitter claims that the repairs from the flood added up to $23,210, while the insurance company for the town has only offered to pay $20,247. He argues that, since repairs were completed from the first flood just 22 days prior, none of the repair work should be considered depreciated, and that the actual cash value should be the same as the cost of the items.

In addition, Reitter is concerned about other costs that may arise once construction starts. If he signs a release that was provided to him, then he would be responsible entirely for any additional costs that could come up.

It is possible that, should the insurance company refuse to cover the gap, that Reitter could petition the town of Framingham to cover it.

Photo via U.S. Geological Survey

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