Anyone who has ever looked at an insurance policy knows that the wording is far from simple. There are always grey areas. I can tell you that most times those grey areas have arisen out of coverage challenges in the courts. Commonly challenged is the intent of the policy wording verses how well defined or restricted the policy wording is. More often than not, these issues stem from the question: Was this loss the result of an “unforeseen occurrence” or a “lack of maintenance”? It has never been the intent of an insurance policy to pay when you fail to properly maintain your property. Here are a few examples of conditions that people often try to stretch the truth on.
After the winter of 2015 you are likely aware of the potential for damage from ice dams. That year snow built up quickly on rooftops. As some of it melted, it formed ice in your gutters. As the ice clogged your gutters and more snow melted, the ice would lift shingles to allow water to seep into your home. Since ice dams are not specifically excluded, then the direct damage caused by the ice dam is covered. Or is it? What is covered by the policy? A roof that is properly installed and in good condition, is much less likely to be susceptible to damage from ice dams. After such a loss, the insurance company would not likely pay to replace the deteriorated roof that contributed to allowing the water to back up under the roof shingles. But they would pay for the damaged insulation, the damaged wall board, stained carpet, warped floor boards… By the common policy language they were only obligated to pay for the damage the ice dam caused—not the conditions that lead to the water seeping into the house. The question many were left with was “why won’t they pay to replace my roof?” I had several customers who felt that not replacing the roof would result in a much greater likelihood that they’d fall victim to ice dams the next time snow built up. That is a loss issue insurance companies deal with every day. You as the property owner are responsible to maintain your property. They will pay to fix the damage the leak caused, but you are responsible for the deteriorated roof which is likely a maintenance issue.
In my personal case, my roof had been installed 19 years prior. I entered the winter thinking the roof still had a couple good years left. The ice dams did a lot of damage to my home that I don’t ever want to repeat. Out of my pocket, I opted to replace the roof and install the ice and water shield well beyond the customary first three feet. The insurance company paid to fix all the rest of the damage.
Had I not replaced the roof, chances are that I would have experienced a repeat of ice dam problems this year. The standard insurance policy excludes losses that are the result of ”Wear and Tear”. My roof was rated as a 20 year roof. I got 19 years out of it. The policy does not exclude a loss due to hidden deterioration or decay EXCEPT when such deterioration or decay is known to an insured prior to the loss. If I knew my roof had issues and failed to take action, I could jeopardize my potential to receive compensation for all of my loss. In such cases, generally, the company will only deny coverage when it is clear that either you knew, or a reasonable person would have known, that the defects were present. If they pay a claim under such situations, you can expect your insurance company will notify you about 60 days in advance of the renewal date of their intention not to offer the renewal of your policy—a nice way of saying you’re being cancelled!
Assume your garage roof collapsed due to the heavy snow load in that 2015 winter. Since the policy wording indicates that “coverage applies to direct physical losses caused by damage to a covered building resulting for the weight of ice, snow, or sleet” you would expect coverage to apply. However, would you expect the insurance company to pay for that collapsed roof if it is has been leaking for years? That long term leakage accelerates deterioration by providing conditions which promote the growth of mold, rot and insect infestation. Failure to maintain the property becomes a major contributing factor that results ultimately in your roof collapse.
Your insurance policy is a contract between you and the insurance company. Under that contract, in return for your agreement to maintain the premises, pay the insurance premiums on a timely fashion, and to report claims in a timely fashion, the insurance company agrees to pay covered losses in a timely fashion. As with my own roof, I had an obligation to maintain my property. If the deterioration of the roof structure was known to me or reasonably should have been known to me, then the insurance company would have been within their rights to deny my claim.
It’s always nice to look at a well maintained home. From a real estate perspective it increases the value of the home as well as neighboring properties. From the insurance perspective, when you maintain your property, you reduce the potential for a loss. By avoiding losses, you keep the loss free discount most insurance companies apply to your policy. Many insurance companies recognize your maintenance record through home renovation premium discounts. The bottom line, preventive maintenance is a wise investment.