Back in 1975, Paul Simon had a hit called Fifty Ways to Lose Your Lover.
Today our tune is that there can be at least Fifty Ways to Lose Your Nest Egg, along with your peace of mind, when black water damage is involved.
Homeowners coverage has become much more complex over the last decade. A while back, we wrote this blog article about sump and sewer insurance. It emphasizes how essential it is to know exactly what your homeowners policy covers. Unlike the couple in the blog post, you still have a chance to fully understand the risk and plan ahead to mitigate the financial impact of any catastrophic event.
Although most insurance companies consider sump and sewer insurance optional, many insurance agents we talk to are puzzled as to why their clients decline coverage when the rate is quite reasonable in their opinion.
We’re puzzled, too, because when it comes to your home and water damage, the most common cause we’ve seen is sump pump failure. For that reason, we believe the rate for sump and sewer insurance is quite reasonable, too.
To better comprehend the risk you’re taking by not having sump and sewer insurance, it’s helpful to understand categories of water.
Now water damage is a big subject, and the source of most claims for insurance companies. The severity of the loss depends on the amount of water and what classification it falls into.
There are three classifications (or categories) of water, and you must understand what you’re covered for in each situation because it will determine how much money you can recover.
Category 1 Water is clean, so they call it “Clean Water.” It’s also clear. It’s the water from your glass that tipped over, the water overflowing the bathtub, the leak from a pipe under the sink.
Category 2 Water is known as “Grey Water.” It can do anything from make you uncomfortable to downright sick if you swallow it or, in some cases, even if you are just exposed to it. It contains a fair amount of contaminants. It also carries micro-organisms along with the things that they enjoy eating. (That means they multiply. Yuck.) Examples of Grey Water events are a toilet with urine but no feces in it that overflows and used dishwater.
Category 3 Water is known as “Black Water.” It includes sewage. Aside from possessing the ability to make you horribly sick, it is incredibly gross. The big thing about this category is that it supports microbial growth and requires special handling.
You can read more about water damage restoration here, if you like. This is one area people don’t realize they’re more at risk than they think and, in our opinion, it’s a smart move to purchase additional coverage. We’ve seen water damage remediation bills up to $75,000. Know that they can go much higher than that.
If you wonder how this could be, it’s partly because with more knowledge comes more responsibility. Knowledge of the risks of black water damage has grown. So removing it now has many regulations around it to protect the health of those working with it, the homeowner, and the community. The cost of doing it safely involves investing in special equipment, clothing, and protective gear. Then there are chemicals and hazardous waste disposal fees.
Another reason insurance costs are going up is that sewer systems are aging. For example, breakdowns are becoming more common in rural Minnesota. Naturally, that means it’s more challenging to find the money to bring infrastructure up to current standards everywhere these days, including metropolitan areas.
When things don’t keep moving along in the sewer system, they back up somewhere. You hope that it’s not in your house. But, if that were ever to happen to you, you’ll never regret having taken the time to sort out what coverage would be most important to you.
Let’s say you’re an electronics connoisseur. Don’t get caught off guard by simply assuming that everything not covered by homeowners insurance is protected by your umbrella policy in the event of a water event.
It’s simply not the case anymore where just about anything is covered by an umbrella policy. They have changed, too.
If you haven’t had a review of your coverage with your insurance agent lately, you may not understand how things have changed. This is one relationship to manage well. You want to be informed about various riders and supplemental policies to determine if they make sense for you. You can’t do it after an event.
When you have a water damage situation, unless you are there when it happens, it’s clean water, and you’re able to clean it up immediately, you are potentially at risk of water moving from Category 1 to 2 and even 3, depending on how much time has elapsed.
The biggest mistake we see is when homeowners attempt a do-it-yourself fix without understanding what they are dealing with.
We know what a temptation it is to do as much as possible to save money. There are times, though, where it’s best to call a professional to at least find out what you might be facing. A phone call to learn more doesn’t cost a dime. Knowledge is power, and it could save you and your family from a world of hurt.