Nothing can bring a business’s operations to a halt faster than the sudden burst of a water pipe. Our insurance claims attorneys want to prepare owners for the next steps after these incidents, including how to file a claim that will allow maximum coverage for water damage to a commercial building.
Why are Some Burst Pipe Claims More Costly Than Others?
The costs of water damage restoration can vary widely depending on the extent of the damage. Flooding that is contained to a single room may only require new carpet and pipe repair, while slow leaks can cause damage that goes through several floors—and possibly all the way to the building’s foundation. Even if the water is shut off as quickly as possible, a pipe can disgorge several gallons of water into the walls and flooring, causing partial or total closures until repairs can be made.
Many different factors can affect the extent of damage from a burst pipe, including:
- Business location. The most common cause of water damage from internal plumbing is frozen water pipes. When temperatures drop suddenly, standing water in the pipes expands, cracking the pipe or busting through its seams. Pipes may freeze even in areas where snow and ice is less common in winter, especially if pipes are not properly insulated.
- Building design and construction. The design and layout of the structure can impact both the likelihood and extent of water damage. Common structural factors that lead to burst pipes include unheated attics, failure to adequately insulate pipes between interior and exterior walls, and faulty installation of plumbing systems.
- Sprinkler systems. Fire suppression systems can save lives, but they can also make flooding insurance claims more costly. Water from sprinklers come from larger pipes, has a more forceful water flow, and is sprayed directly from overhead using a wide dispersement system.
- Multi-story buildings. Water will spread across floors, through porous surfaces, and down into the lowest recesses of a building, contaminating everything it touches along the way. If a pipe bursts on the upper floor of a hotel or an apartment complex, owners may have to replace drywall, lighting, flooring, and carpeting in every unit beneath the leak.
- Age. Older buildings increase both risks and costs associated with water damage, since older pipes are more likely to break and may need extensive updates when they do. If a pipe bursts in an older structure, owners will need to pay for any updates needed to bring the building into compliance with current building codes.
Take Action Now to Prevent a Burst Pipe from Eating Into Your Profits
Owners are often underpaid for their water damage claims simply because they don’t fully understand the terms of their property damage insurance policies. It is essential that you read your policy carefully to determine which losses are covered, what events will trigger coverage, and whether certain coverages may be extended in a large-loss situation.
Once you know what you can inspect from an insurer after a pipe bursts, you can take additional precautions against these losses by:
- Investing in risk management. There are many small and cost-effective interventions that can help property owners prevent leaks before they cause a problem. A plumber who is familiar with commercial structures can properly identify and diagnose issues in the plumbing system, alleviate pressure on overloaded systems, or install leak detection and warning technology.
- Taking advantage of optional extras. Commercial insurers typically offer a wide range of endorsements to their policies for an additional fee. Policy additions such as increased cost of construction, extra expense and umbrella coverage, and line-of-sight coverage can offset costs during rebuilding and allow you to correct both structural and aesthetic imperfections.
- Increasing business interruption coverage. The larger your commercial enterprise, the more you could lose when a flood damages the property. Your business interruption insurance should be enough to cover your monthly operating costs (including employee payroll), profit losses, temporary relocation, and other ongoing expenses even in a worst-case scenario.
- Cost-effective specialized inventory and equipment. Your insurance policy should always take into account the specific needs of your business. For example, flooding in a restaurant can cause environmental concerns, causing the destruction of perishable stock and requiring hazardous material cleanup to protect against contamination of food and water.
What to Do Immediately After Water Damage Is Discovered
The first thing you should do after the water has been shut off is to notify your insurance company. Insurers have strict rules about prompt notification of losses, and reporting the damage early allows your claim to get started as soon as possible. Once you have notified the insurer of your intent to file a claim, you should:
- Show the extent of your losses. The evidence you present to your insurance company is directly related to the amount offered on your claim. Before you take steps to correct the damage, make sure you have photos and video of the damage and the condition of the property immediately after the leak occurred.
- Prevent further damage. Policyholders have a duty to begin cleanup and drying procedures to prevent further losses, such as removing water from interior spaces. However, you should not make any permanent repairs or perform anything other than reasonable or necessary flood mitigation until an insurance agent has seen the damage.
- Complete and file your claim. Your claim may require extensive documentation, including inventory lists (including prices, dates of purchase, and serial numbers), past and projected income estimates, and receipts for out-of-pocket expenses. Once you have submitted the claim, you should keep a copy in your own record, as well as any correspondence between you and the insurance company.
- Get help from an insurance litigation attorney. Unfortunately, insurers often attempt to deny water damage claims by blaming the policyholder, citing the owner’s own failed maintenance or negligence as the reason the pipe burst in the first place. When this happens, a commercial insurance attorney can help you get fair payment for your losses.
Commercial policyholders often experience unfair denials, delays, and underpayments for their water damage insurance claims. If your insurer is refusing to pay for damages, it may be necessary to hire an attorney to advise you on your next steps. Simply fill out the form on this page today to contact an insurance attorney at the Voss Law Firm or order a free copy of our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.