Case Studies: Water Damage

Residential flooding

All the houses in this suburban road had been flooded for a second time within 10 years.

On the first occasion the insurance companies involved had paid for repairs and redecoration, but ignored the possibility of water retention in the sub-floors which could cause damage. They assumed, wrongly, that the water would drain and evaporate. We were appointed by all the affected owners, and after arranging for the properties to be dried out, we carried out investigations to establish the extent of damage, including exposing all of the sub-floors. Unsurprisingly, a number of the properties were affected by wet and dry rot from the previous flooding, but which were excluded perils by the terms of the policies.

Convinced that the only reason for this rot damage was the neglect of the insurers and their loss adjusters in their approach to repairing the previous damage, we set about tracing all the policies which existed at the time of the first flood, and persuaded all the previous insurers to meet the full costs of repair to the sub-floors; whilst getting the current insurers to pay for all the damage directly traceable to the latest incident.

If there had been no second flood, all of those owners would eventually have discovered, and had to pay for, major floor and sub-floor repairs, without possibility of claim.

Burst underfloor pipe

With an immaculate stylish family home in the heart of the Hampshire countryside, and a claims-free history over many years insured through their bank, Mr & Mrs B did not expect any claim issues when they suffered a leak from the hot water cylinder in a ground floor bathroom.

The escaping hot water had spread extensively under granite and hardwood floors in other rooms with an estimated £40,000 to put everything right. The insurer’s claim handler didn’t accept a plumbing problem as the cause, and suggested the damage was attributable to rising damp.

Three months later with no resolution in sight Mr & Mrs B turned to us for assistance. It was clear the claim handler had failed to appreciate the complexity of the incident, in addition to wrongly diagnosing the cause. We brought in a chartered building surveyor whose report supported our client’s case, but the claim handler wouldn’t budge. We prepared and submitted a detailed formal complaint, which was upheld by a senior executive at the insurer, and the claim was settled at £47,000.

Having an unblemished insurance record is no guarantee of fair treatment when you have to make a claim.

Burst water main

For the second time in 2 years, and the third in five years, our Personal Trainer client suffered the flooding effects of a burst water main to his South London basement fitness studio.

Although he insured for his public liabilities he could not obtain insurance for damage to the premises or equipment because of their vulnerability to flooding. So for the third time on his behalf we prosecuted a claim against the Water Company. Water companies have what is called strict liability under The Water Industry Act 1991, which in essence renders them liable, without having to prove negligence, for damage caused by escaping mains or sewage water from the services they maintain.

Third parties are seldom liable for the same scope of compensation for damage as is usually available under household and commercial policies, but on each of the three occasions we acted for this client we managed to secure the full cost of repairs, plus this last time the costs of tanking to limit future damage should it happen again. And we recovered the loss of profits suffered due to the business interruption.

Our best advice to this client was move to new premises as this will keep happening.

Gale force storm

One of the worst storms to hit the east coast of England took the roof of our commercial landlord’s Ipswich warehouses, let to a logistics company.

The client was based in the north of England and had very few local contacts, so they asked us to take over the management of the claim and arrange the remedial works. We attended site, addressed the issues raised by the tenant, agreed temporary measures, appointed a local building surveyor to prepare a specification and deal with any other building issues. We then met and liaised with the loss adjuster to agree the outline scope of repairs to remedy the damage.

As is often the case with larger commercial losses, the insurers investigate not only the circumstances of the incident being claimed, but also scrutinise the underwriting information supplied, to ascertain if they had been given an accurate description of the risk they were asked to insure. Sometimes this can be a case of the insurers doing their underwriting at time of claim, which is very poor practice. However, they are entitled to satisfy themselves as to the legitimacy of any claim. On this occasion the insurance had only been placed with them 4 months earlier, and there were two brokers involved in the arrangement of cover. Unpicking what was said to whom and when proved a little tricky, but in the end we demonstrated our client had been honest and transparent, and the Underwriters accepted the claim and paid out £70,000 for repairs.

Storm clouds gather over claims as well as in the skies above.

Underground stream

To our clients’ horror, and for no apparent reason, water started to come up through the floorboards of their home.

As quickly as it was pumped out it refilled the sub-floor void. The water authority was alerted, the mains supply and drainage systems checked, but the source of the water could not be found. The insurance company suggested the problem might be rising water tables, which was uninsured; and in the absence of being able to identify an escape from a fixed water pipe, or the problem having arisen through storm damage, they said the claim was not admissible. The policy did however cover ‘accidental damage’, so if we were able to demonstrate the occurrence had arisen through a cause which was not specifically excluded by the policy, the insurers would be obligated to pay.

We carried out extensive ground investigations, and also looked into the physical and geological history of the site on which the house stood. We concluded, on a balance of probability, that the problem had arisen as a result of disturbance to a dormant underground stream by the actions of the water company recharging their boreholes. We could not prove it, nor would the water company admit it, but it was sufficient for the insurers to agree to pay. We cured the problem by incorporating a drainage ring main around the house to siphon off the water, and repaired and redecorated the property.

Fine print can work against insurers as well as for them.