5 ways clients can avoid homeowner claim denials

It’s not just accidents that lead to home insurance claims.

And that creates confusion for homeowners when claims are denied because an insurer determines the root cause of damage is improper maintenance.

The bottom line is that gradual wear and tear can do as much damage as some weather events, notes a recent commentary from rate aggregator Rates.ca. It adds insurers expect clients to perform routine upkeep, and that claims for damage stemming from corroded plumbing, failing roofs or damaged foundations are frequently denied. And those costs can revert to homeowners.

“Insurance is designed to cover sudden, unexpected events, not long-term issues that could have been prevented,” says Daniel Ivans, who provides expert commentary for the insurtech. “When damage stems from neglect or gradual wear, insurers will often classify it as a maintenance problem instead of an insurable loss.” 

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He lists five areas where a homeowner’s failure to maintain a property can lead to denied claims:

1. Leaks that develop slowly because of wear to shingles, or damage to flashing or caulking, are generally categorized as ‘preventable’ by insurers. “In many markets, roofs over 15 years old are also adjusted on an actual cash value basis,” Ivans adds, “meaning only the depreciated value is covered, and any resulting interior damage may not be included.”
2. Leaks that originate in corroded or deteriorated pipes or other plumbing fixtures also may be viewed as preventable, since the damage builds up slowly. What’s more, coverage exclusions can also apply to damage stemming from long-term seepage. Claims denials are most common in situations where the damage is visible and homeowners fail to make repairs.
3. Water claims are common, but seepage, flooding in basements or structural cracking tied to poor grading, structural settlement or concrete deterioration can be seen as a maintenance issue. “Insurers generally do not cover losses resulting from foundation issues that develop slowly or stem from inadequate drainage,” notes Ivans.  
4. Upkeep failure like ignoring damage to siding, worn gutters, failed seals or uncaulked joints, can let moisture into a house. Damage claims made due to these issues can be denied because insurers may consider them preventable.
5. Forgoing routine service to heating, ventilation and air conditioning systems, water heaters and sump pumps often lead to damage costs becoming the homeowner’s problem. But if a problem stems from an unforeseeable or sudden mechanical breakdown, the resulting damage to a home may be covered.

“The best way to protect your coverage is to keep records of maintenance, address small issues early, and understand what your policy excludes,” says Ivans. “Those steps can make the difference between a paid claim and an out-of-pocket repair.” 

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.