My Homeowners Insurance Denied TWO Claims… Here's What Every Homeowner Should Know

Hello and welcome back to Market Shares. I'm your host, Tony Blodgett, and today I'm going to talk about something a little bit different than maybe my normal topics. You'll see I have no notes, I have no charts, I have no graphs. We have none of that stuff today. I'm just going to talk about, I'm going to talk about kind of a personal experience that I recently had, but it was around the area of homeowner's insurance. And I thought it was relevant to talk about here today because so many people, especially first-time homebuyers, but I think really just anybody who is a homeowner might not realize some of the limitations that insurance provides. Now, I'm going to make it clear. I am not an expert at homeowner's insurance. I just want to share with you a couple stories of things that I've recently been through. And then what I'm going to ask of the audience is, is there an insurance agent out there who watches this, who would love to come on MarketShares, and maybe we can do a little bit deeper dive into homeowner's insurance, some of the nuances of it, et cetera. Because I will tell you in the mortgage and real estate space, if you're in these industries, you know that homeowner's insurance has become very difficult to obtain in many cases. I was just on a call earlier today with a loan officer that I know in Hawaii, and hearing about the challenges they have, especially with condos getting replacement coverage for condos in Hawaii. We have these issues in Florida, other parts of the country where there's a lot of natural disasters. In California, where there's been wildfires and different things like that, there's certain carriers that just don't even offer policies in these states. So homeowner's insurance is kind of a mess, if I'm being quite honest with you. And I would love to have an insurance agent come on here and maybe talk in more detail about that. But I just want to share these two little stories. They happen within a day of each other, which is kind of frustrating in and of itself. But let me give you the background here. When I purchased my home, it was back in like 2014, it was in August. And that's when we closed on the loan, August, September, somewhere in there, at the end of summer. And during my home inspection, I realized that there was some evidence in the crawl space that they had tried to do some water mitigation. There was some sump pumps down there, and you could tell that they were trying to keep water out of the crawl space. And so my home inspector recommended that I put in a footing drain and a sump pump system just to keep any water from infiltrating the crawl space of my home. So I did that before I even moved into the house. It was the first thing that got done to the home was this full footing drain got installed, and then they put a big barrel in the corner with a sump pump in it. And I've had no water issues for the last nine years or so that I've lived in the home. And so, you know, a few weeks ago, I noticed that I started having condensation on the inside of my windows. And I'm like, what is going on here? And I tried to figure out, thought maybe my dryer vent had come off or something. And then I realized a few days later that my air conditioning unit, you know, my central air conditioning heating unit was not blowing out any air. And it was one of the warmer days here this summer. And so the temperature in the house was going up, my heat pump was running and on and, and no air was coming out. So I'm like, I wonder what's going on, check the breakers, nothing. So I went down into my crawl space, which I have access in my laundry room area. I looked down there and it looked really wet. And I'm like, man, it looks like it's all wet down there. That's weird. And I started crawling down the stairs. And I realized it wasn't just wet, it had a couple feet of water in my crawl space. And I don't know exactly what causes that amount of water to be in someone's crawl space. Maybe it's all the rain that we've had here in the Seattle area. Maybe, you know, it's the water table is really that high. But nonetheless, there was based on my estimates, about 40,000 gallons of water under my home. And what had happened was is that some pump had failed. But worse than that, it had covered my air handler for my HVAC system. So it was about a third of the way, completely submersed in water. And so I called the company that did my sump pump, they came out, we pumped out the water, they put in a new sump pump, that problem was solved. And I was like, you know, I probably shouldn't turn on the air conditioning unit without getting the heating and air conditioning company to come look at it. I mean, the filters were soaking wet, everything was drenched in water. And they came out and they took a look at it and said, yeah, you know, we could possibly rebuild it. But because of the age of the unit, which was installed when the home was built back in like 2007, you know, the type of refrigerant it uses, you know, the efficiency of this, it's really not a supported, you know, unit anymore. And we would recommend replacing the air handler. I'm like, okay, no problem. Let's get a quote for that. So they called me up. They're like, look, we can't unfortunately just replace the air handler because it doesn't match up with your heat pump that's outside. So you really need to replace the whole unit, the inside and the outside unit. Needless to say, you guys, this was an $18,000 quote. And they quoted me two different brands. They were both really close to about $18,000. And so I'm like, huh, that's a lot more than I expected. I have, I think a $2,000 deductible on my insurance. So I'm like, maybe I'll reach out to the insurance company and just see if this is something that I should claim since, you know, it was flooded by water. I would think that that would be covered. So, you know, that evening, you know, that the heat and air conditioning guy leaves and, you know, my wife got home from work and, and, you know, got home for the day and took a shower and was going out to the garage to our refrigerator out there and realized there was water leaking on her car. And this happened the exact same day. So she calls me, she's like Tony, there's water leaking, you know, in the garage. And well, what's right above the garage is our master bathroom where she had just taken a shower. I'm like, well, clearly we have some sort of issue going on. And through trying to troubleshoot what the problem was, you know, maybe it was a busted pipe, maybe it was the drain. We do have a tile shower. So my first thought was maybe, maybe that, you know, membrane had failed and the shower pan was leaking. So I got in the ladder and I cut a hole. Luckily, this is above my garage and not like above my living room or my kitchen, which would have been even worse. But I cut a hole in the drywall and I get up there on the ladder and I could see that, you know, it was pretty obvious that this has been happening for a while. There had been, you know, there's looked like a little bit of mold up there. I mean, evidence of, you know, water, probably it never got to the point where it dripped through the ceiling, but clearly this had been happening for a while. So the next day I reached out to my insurance agent and I just said, hey, you know, I got a couple situations that happened to all be happening here at the same time. And I just don't know if these are candidates for my homeowner's insurance policy, but, you know, I had a contractor who I called that evening and he, you know, when we determined it was the shower pan, you guys, this is not a small project. I mean, it's a pretty large shower. It's all tile. All the tile has to come out. The whole floor plant, floor pan has to come out. It's all set in mortar and be completely rebuilt. And obviously with a home that's the age of mine, yeah, I probably want to update some things, right? This is going to turn into a whole bathroom remodel. And I wouldn't expect insurance to cover, you know, all of that, but, you know, maybe just the shower pan. I don't know. I didn't know. So I'm talking to my insurance agent and the first thing I explained was the situation in the crawl space where my HVAC unit was ruined by flooded water. And they shared with me that, you know, unfortunately because it's a sump pump and there's nothing wrong with sump pumps. I mean, some houses need them, but because the sump pump failed and that's what flooded the HVAC system, that would really be considered more of a maintenance issue and any sort of damage due to a failing sump pump is not covered by my insurance. And I'm like, okay, I guess, shame on me. You know, maybe I should have had an alarm system that would alert me if the sump pump failed. Maybe I could have had that sump pump inspected annually so I could see, or maybe that's a maintenance issue and okay, so no help with the $18,000 HVAC replacement from my insurance company. So then I asked her about the water situation that was dripping on my wife's car and I described to her what I just described to you. I told her that there was, you know, some mold up there and I could tell this had been happening for a while. And she goes, you know, unfortunately again, you know, it's kind of going to fall under the category of a maintenance issue. I'm like, well, it's my, it's my shower pan. Like, I mean, I, how would I know if that's failed? You know, until there's literally water coming from the ceiling. She goes, yeah, I understand. But you know, you mentioned there was mold and evidence, you know, long-term evidence of water. That means it's been happening over time. And you really need to think about insurance coverage. And this was the key here. You need to think about insurance coverage as being something that is immediate and catastrophic. I mean, what do you mean by that? She goes, well, like if you had a pipe burst and it flooded your home, like that would be covered by insurance. But because it's a slow leak over time and just, you know, then, especially with evidence of mold and, you know, it's pretty obvious it's been happening over time, that isn't something that would likely be covered. So look, I wanted to share this story with you because I think there's a lot of people out there who have homeowners insurance. And I don't know. I mean, I've been in this industry for 27 years. Like I've bought and sold a lot of real estate and I wasn't surprised about the sump pump thing. I mean the shower, I thought they would cover that. But both of them, I thought, you know, this, this is something that insurance very well may, may cover. And I was surprised to hear like an emphatic no on both of them. Now, maybe some of you viewers might think that I should get a second opinion, get a different insurance company. I don't know. Let me know in the comments if there's something else I should pursue here. If you have any thoughts on that. But the reason I want to talk about here on market shares is because all of us that are in real estate are looking to own real estate. You know, you might want to have a conversation with your insurance agent about these types of things and what else might we think is covered that ultimately might not be covered. And I could just imagine a first time home buyer or someone who is really stretched to their boundaries on purchasing their home and have something like this happen that you would think the only way that I could fix this and repair the home is if I had help from insurance and just to find out that you're not going to have insurance or you're going to go all summer without your air conditioning unit working or all winter without your heater working because something like this happens. So you guys, there isn't much more to this episode than bringing awareness to this. And I do want to have someone who's an insurance expert, maybe come on, we can have a conversation. We can talk about my two particular scenarios and if that's normal, but what are other things that homeowners come across with their homeowners insurance that they think might be covered and turns out not to be. And as a real estate professional, as a real estate agent or a mortgage professional, when we have clients that are pushing the boundaries of being able to qualify for a home, these are things that I think that we should be willing to talk about with our clients. Have you thought about a reserve fund set aside for things like this? Because things you think might be covered by insurance might not be. Same thing with home warranties and things like that. They're not going to cover all the things that you think they might cover. So how important is it for a homeowner to have reserves set aside for these types of situations that might arise through the course of homeownership? So you guys, I hope you enjoyed this episode. If you have thoughts on this, I would love, I do read the comments. I'd love to hear what your comments and thoughts might be. If you happen to be watching this on YouTube, where you can leave comments. If you're listening on one of our podcast channels, we appreciate you listening there. And if you have an insurance agent that you think would be a great person to have on market shares, where we could talk about some of these things and maybe even get some more insight into what's going on in the insurance industry, um, both in the housing market, but also the automobile market. If you guys watch the conversations we have about inflation, part of the reason inflation is so high is automobile insurance has gone up. Um, I understand why some of the homeowners policies have gone up, but also automobile seems like that whole industry has some issues. If you have someone that you think is an expert at that, that would be a great person to have on here. Please let me know. And until next time, you guys, thank you for watching market shares. Take care.