Episode 91: How To Adjust Frozen Pipe Losses Without Missing Coverage

Frozen pipe losses are one of those claims that look simple on the surface, right up until the policy language and the facts start fighting each other. Today we walk through the biggest freeze-claim mistake we see: treating a burst-from-freezing pipe like a routine accidental discharge loss and automatically excluding the pipe repair, even when freezing is the covered cause of loss. If you adjust homeowners insurance (HO3) or commercial property claims, this is the kind of detail that changes the whole outcome. 

We also get practical about the condition that trips up coverage decisions: making a reasonable effort to maintain heat. What counts as “reasonable” when one bathroom runs colder than the rest of the house, when a basement door is left open, or when fuel deliveries and utility payments get messy? We talk through the kinds of documentation that actually help, like gas and electric bills, propane delivery history, statements that lock in a timeline, and even modern temperature monitoring and water sensors that create a real record. 

Then we shift into the ugly side of winter losses: extreme freeze events where everything is iced over and you cannot scope the full damage until the building thaws. We share how we set expectations with insureds and contractors, why supplements are normal, and how this mindset applies to other winter problems like ice dam claims. We also touch tenant-caused freeze losses, subrogation, and why liability coverage can get complicated fast. 

If you want sharper coverage analysis and smoother claim handling before spring storms hit, listen through, then subscribe, share with an adjuster friend, and leave a review so more people in claims can find the show.

For more insights, you might consider a career in liability adjusting or if you're searching for reliable adjusting services, visit Auten Claims Management.

To explore more about Chantal Roberts and her contributions to the industry, visit CMR Consulting.

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Transcript

Welcome And Spring Weather Banter

William Auten 0:06

Hello, I'm Bill Auten of Auten Claims Management.

Chantal Roberts 0:09

I'm Chantal Roberts of CMR Consulting, and welcome to the Art of Adjusting Podcast.

William Auten 0:14

Today we're going to talk about life as an insurance adjuster from the perspective of property, auto, liability, or workers' compensation adjusters. Our goal is to bring interesting topics in the world of claims adjusting to people who are working as an adjuster now and to people who are considering a career as a claims adjuster. Hey Chantal, how are you today?

Chantal Roberts 0:33

I'm doing well. Thank you. How are you?

William Auten 0:36

Pretty good. Pretty good. Uh we're on the cusp of spring. Well, spring has happened. Uh uh by the time this airs, spring will be almost a week old.

Chantal Roberts 0:46

So do y'all have the uh you know, first spring or or you start off with like fake spring and then you go back to winter, and then you go to first spring and then back to winter and then second spring. Do y'all have that going back and forth? Like I don't know, in one day.

William Auten 1:03

We not it not really in one day. I mean, the temperature changed like 30 degrees in one day last week.

Chantal Roberts 1:10

Okay, it did go too.

William Auten 1:12

Yeah, so that that kind of thing happens. Um, it's certainly not on a schedule. It's not like, okay, second week of March, we're gonna have early spring, and then third week of March, it goes back to winter. It's a crapshoot. You might have an entire March where it's in the 60s and 70s. That's very rare. Um, most cases you'll have mostly winter in March with a break, a surprise break here or there somewhere. But uh by this time, everybody is mentally challenged. They're all losing their minds waiting for the sun to shine. Rochester is a very cloudy city.

Chantal Roberts 1:51

I would insert that anybody living in the north would be mentally challenged to begin with because it's freaking cold there.

William Auten 2:00

Um mentally challenged probably wasn't the right choice of words.

Frozen Pipe Claims And Common Errors

Chantal Roberts 2:04

Especially to me. Okay. But you know what? I'm super excited. Uh, this is actually our last topic about the winter. And so now we can actually start looking forward to spring because we're going to be talking about frozen pipe claims. And I just posted on LinkedIn a little video that I did where the, and we talked about this a couple of weeks ago, where my outside pipe had frozen solid. And then the water that the sump pump was trying to get out, what came back, exploded the sump pump cover everywhere, and uh the pipes came undone. And so that was a lot of fun. It was, it was a lot of fun. It wasn't necessarily a frozen pipe claim, so we couldn't turn it in for homeowners, but yeah, I've had a little experience. Uh, you can go to my LinkedIn and and check out that that nice little video I put together.

William Auten 3:09

That's uh an unusual way to have a freeze damage claim. Most times the supply lines are the ones that freeze, and what you're talking about is a discharge line or uh almost like a drain line that had frozen and and got blocked up.

Chantal Roberts 3:23

Yeah.

William Auten 3:24

Um and uh yeah, so uh where where do we start here?

Chantal Roberts 3:30

Um Well, there's places where in the coverage that adjusters get tripped up, and uh I figured we would be talking about that today.

William Auten 3:39

Sure. Yeah, one of the things I I had teased in the last episode um was one of the most common mistakes I see when evaluating um a freeze damage claim. And so adjusters are used to seeing uh claims involving accidental discharge from a pipe, and that's when a pipe fails, usually due to corrosion and it's inside a wall or inside a ceiling or something, and it leaks and causes damage to the surrounding building, drywall, floors, whatever. And uh that accidental discharge peril in an HO3 has a um kind of an exception. They'll pay for the damage from the water, but they won't pay for the repair to the pipe. And typically that's because the pipe has worn out and wear and tear is generally not covered. So it says right in there that we'll pay for the resulting damage, but we'll not pay for the plumbing repair. So adjusters are used to doing their estimate for the drywall, the flooring, whatever. And then uh there'll be a plumber's repair um invoice, and they'll attach that at the estimate. I'm talking about independent adjusters now, by the way, when when reporting to a carrier, and they'll attach that invoice and just submit it for carrier consideration, um, recognizing that that repair typically is not covered. Now, that's fine during the summer months and the fall and the and spring, but when you get into the winter months and you start seeing damage from frozen pipes where the pipe freezes, the pipe breaks open because the ice expands inside it and it bursts the pipe. And then water damage results from that. The adjuster, what I've seen adjusters do is take the same approach. Well, this is a leak from a pipe, so we're not going to pay for the repair to the pipe. However, um, this is um the damage to the pipe here was caused by freezing, and freezing is a covered peril, and it's different than an accidental discharge claim. So you would pay for freeze damage to the pipe and the resulting water damage. Um, and that's the that's the trip-up that I see the most common um on these types of claims.

Chantal Roberts 5:51

Right. But it would not be covered if it was, let's just say, a commercial policy then. The frozen pipe.

William Auten 6:00

A commercial policy. Why wouldn't it be covered? A pair of freeze. I don't know.

Chantal Roberts 6:04

That's how I'm I'm carrying on the conversation.

William Auten 6:07

Oh, the the uh yeah, so um you can tell we rehearse this. Yeah. You took me by surprise with the question as well. Um, but uh yeah, freeze is a covered peril on a commercial policy too. So uh same, same deal. Um, you would have the now that I don't know how the exception reads on an accidental discharge on a commercial. I haven't looked at it in a while.

Reasonable Effort To Maintain Heat

Chantal Roberts 6:33

I believe it reads mostly the same, where if it's uh a broken pipe or sudden and accidental, we as the insurance carrier don't pay for that, except there, and then there's the exception to the exclusion. Um, now of course, with both the homeowners and and the commercial property policies, you will get into this thing of quote, if you do everything possible or within your power to maintain heat in property.

William Auten 7:08

A reasonable effort, yeah, a reasonable effort to to maintain heat in the property, right?

Chantal Roberts 7:13

And then the question becomes well, what is reasonable? And what do you because if the insured thinks that they've done that, is that reasonable? Uh sure.

William Auten 7:29

So so if you're gonna go away on vacation and you don't want to uh you don't want to incur the cost of heating your house like you would if you're living there, and you decide to turn the heat down to maybe 55 degrees, uh logic dictates that 55 degrees is above the freezing point, so you should be good, except for the fact that you've got this one room, uh bathroom on the one end of the house where there's um you know it's really far from the furnace, and the the air doesn't really get into that room as much as a normal. Um and you could then it could get cold enough in that room, then especially if the wind's blowing the right direction and the temperature's the right, you know, below freezing uh or below zero, um, you run the risk of that room freezing. Now, what's reasonable is it reasonable to set that at 55 and expect that everything's gonna be okay. That's a judgment call for the carrier, I guess. Now, if you turn the the heat off while you're on vacation in the middle of winter and you live in a uh cold climate, uh that's not reasonable.

Chantal Roberts 8:40

That's like your like your son, which we which we um featured on an advertisement for LinkedIn with.

William Auten 8:48

Yes, yes. Sorry, Ben. We had to bring your story into but it was such a great story, Ben.

Chantal Roberts 8:53

So thank you. So thank you. We appreciate it. We really do. Love you, mean it. Bye.

William Auten 9:00

Blessed Lord.

Chantal Roberts 9:02

So, but yeah, that that is that is the thing. And of course, we got to go back to, as I always ask my students, what is a reasonable person? And the answer is, okay, well, that would be a jury. That would be people, your your peers. So while an insurance carrier or an adjuster can go, oh, you know what, I think 55 is probably like the lowest I would go. And and I've said 55 before. Uh, and I've had my field adjusters, such as you, go take a picture of the thermostat. Uh, although sometimes it has already been reset by that point.

William Auten 9:43

Yeah, that that's not really evidence um necessarily.

Chantal Roberts 9:47

True. But I uh but I have asked, by the way, adjusters, I have asked for electric bills or gas bills or whatever, however, they heat their home. So I could see the dip in in electric usage or gas usage or whatever.

William Auten 10:05

Right. And we've had many claims where a policy holder will say, um, the, you know, they've been away from the property, but look, I paid um the fuel company to deliver propane on a regular basis and they forgot and they just didn't show up and I didn't know. And then you call the fuel company and they say, we didn't forget, they didn't pay their bill. Um, so is that reasonable or unreasonable? Uh no, I would say not paying your utility bill is unreasonable.

Chantal Roberts 10:37

Is unreasonable, yes. And unfortunately, you would get a denial by the insurance company, even though I think that your pipe would freeze. Would you hold on? I got to think about this. Um well, you didn't keep your heat on. So, yes, you would get denied by your insurance company because you failed to keep heat on, even though freezing is a covered cause of loss. And isn't insurance fun? I love insurance, these little brain teasers that we carry. I don't know why more people aren't in insurance. I think we have a selling problem or marketing problem personally, but uh that's a whole nother podcast.

William Auten 11:16

Anyway, yes, it is super fun.

Chantal Roberts 11:18

It is super fun.

William Auten 11:20

It's it's a lot of complexity and um if you like solving it's like a puzzle. Yeah, it's a puzzle.

Chantal Roberts 11:26

Oh my god, it's like this, Bill. We're we're looking, see, we're like I'm in Kansas, he's in New York, we're on the same wavelength. It's crazy.

Proving Heat With Documentation

William Auten 11:37

It is crazy.

Chantal Roberts 11:38

Okay, so anywho, um we're talking about how we prove this and what kind of documentation we should be looking for. I had said, you know, gas bills or electric bills or the propane bills or or something to that effect. Anything else that you can think of?

William Auten 11:57

As far as proving that they took reasonable steps to maintain heat. Well, um, they might have the heat on, but uh they left the window open or they um, you know, didn't make a repair. We've had cases where we've had a um a walkout basement and someone left the door open and the wind came in and it froze all the pipes in the basement. The heat was on upstairs, uh, but downstairs in the basement, and you know, it was just in one end. You know, a home is a kind of a a building, any kind of building is kind of a dynamic structure insofar as the the air inside it is going to be different in some areas than than others. It uh it's gonna be different temperatures, and um the heating system is going to work more effectively in some areas than others. We have a wood stove in our house in addition to a steam boiler. Um when the boiler's running, the heat is pretty well distributed throughout the house. But if we're relying on just the wood stove, the only room that's really warm is the living room and a few rooms around it. Um the other end of the house gets very cold if we were to leave the heat completely off. So um, you know, knowing your house and knowing the dynamics of where the cold spots are is important. Does that does that get into the realm of what is reasonable and what is not? And that's a judgment call, you know.

Chantal Roberts 13:25

Well, I I I think this is when the adjuster, and we don't hear this a lot for property losses per se, but but a frozen pipe might be an excellent time to take that recorded statement of your insured, because this is the time to ask your insured, okay, which room actually gets a little cold. So for example, uh when you and your wife, your lovely bride, come and visit Aaron and me for our barbecue tour or whatever, uh, we uh are gonna put you up in the French room, in the fancy guest room, La Tida. And yeah, that room in the winter, super cold, super cold. In the summer, it gets a little warm because it's west facing facing. So if I had a frozen pipe over there, I would, as the adjuster, I would want to talk to the injured, like, hey, what what temperature is that room? Yeah, you set your house for let's say 65, and you had someone coming over and watering your plants, making sure that things were dripping or you know, turning on the faucets to drip if it happened to get really cold overnight or whatever, but what's the temperature in that room? Right. And and so in this particular instance, we normally don't take recorded statements for property damage, but this might be one where we'd want to.

William Auten 14:59

I would say that if there's a suspicion of coverage of a coverage issue, um whether it's the reasonableness of knowing the cold spots in your house, which I regard as kind of a thin um basis to issue a coverage disclaimer on a freeze claim. But um more importantly, if it's an issue of over maintaining heat and a dispute over fuel bills and who told who what and when to show up and all that kind of stuff, um, that might be a good opportunity to take a statement or a good time to, you know, document the insured's uh position on things because what they tell you in that statement, you know, we don't take statements as a gotcha. Uh very true attorneys attorneys blame us for taking statements because we just want to uh trick somebody into saying something that's gonna uh hurt their claim. Um rather we look at it as a way to get the facts uh memorialized so that nobody can change your story later one way or the other. Right. Um Right.

Chantal Roberts 16:03

And I actually talked about that in a expert case that I had where I had said, you know, it's it's best practice that a field adjuster would go inside and take photos of the inside of the ceiling showing no leaking, no damage, or getting into the attic showing no leaking, no damage. But it's not standard. And of course, best practices is a little bit higher of a bar than what standard is. And it's only after we get nailed in a lawsuit, and it's because our field adjuster did not take these photographs and we've had damage creep or something to that effect. And this is slightly off topic, but this is the reason why we now do that, or at least we did at my company, is we were we said, Yeah, I know that it's all on the outside, but do us a favor and get in the attic and take a picture, and then go into every single room and take a picture, even if it's a wide lens, but make sure that we can see the ceiling. So we don't have that kind of damage creep. And the and the reason is is that we would see, okay, we didn't have that leak on this date, but then we had another storm, and now we have a leak, whatever, but the same difference here. And also about the you were saying the the coldness areas, I was thinking particularly when you when you mentioned that, I have a spot, it's under my sink, and I think that that we don't have enough insulation in that area. So when Kansas City or the Midwest had that really cold snap a couple months ago, I actually bought some styrofoam insulation and put it up against that bar wall. It doesn't really help the pipe, but of course I left the the paper faucet leaking, and then I opened the door so that whole cavity now can be warmer because I've put the insulation up.

William Auten 18:12

Yeah, uh letting the faucets drip, uh just cracking them open just a little bit at night when you know you've got extreme cold conditions outside uh can help to prevent um you know freezing and blockage of pipes. It's not the it's not the end-all be-all. If it gets cold enough that stuff's gonna freeze anyway, but um that is one trick and keeping the cabinet doors open is is not a bad idea either, especially when you know um the pipes are on an outside wall and uh uh the there's a risk of freezing there.

Chantal Roberts 18:45

I do it on all my outside walls. And in fact, for for us southerners who aren't used to having these kinds of really cold extended days, I did look it up and and because of course my husband's from Iowa, and he's like, eh, no, we don't need to leave it dripping. Yeah, it's fine. And I'm like, oh my God.

William Auten 19:07

He's probably right.

Prevention Tips Before You Travel

Chantal Roberts 19:09

He's probably right, and he's an insurance adjuster too, as everyone knows. And I sit there and go, oh my gosh, but I can't deal with an insurance adjuster because you know how we are. So anyway.

William Auten 19:22

Well, when it comes to prevention, um, there's there's one thing that I tell everybody that if you're going away, um, there's a couple things that you should do to your house uh while you're away. One, make sure that any fuel deliveries that you have are on schedule and that they're going to happen. So if you have, you know, propane on site or fuel oil on site, make sure those are topped off. Uh, if you've got gas from the street, then um probably not too much of a worry there. But um but the biggest thing you could do, the best thing you could do is just turn the water off because if your pipes freeze, um, if for some reason there's a failure of the heating system and the pipes do freeze, you're not gonna damage the whole house with a flood as on top of the freeze damage. You're just gonna have some pipes that have burst, and those repairs are actually not that expensive as compared to a house that um where the water is left running uh through broken pipes for a week and a half or two weeks or wherever however long it is that you're gone. Um that can cause a lot of damage.

Chantal Roberts 20:32

Yeah, and you mentioned uh someone leaving a window open and that and that uh caused me to remember something. My neighbors texted me and said, Hey, by the way, we're gonna be gone for spring break, and uh the daughter's boyfriend will be staying at our house, you know, watching the dogs and and that sort of thing over the week that we're gone. So, in case you see some strange kid, and I'm like, okay, we will grill him down in the basement, you know, slap him around a bit, find out whatever you want to know. And she said thanks. And I noticed again, we are going through our false spring dying of winter in here in the Midwest. And so Monday it was 32-ish, 30-ish, and it snowed. And so now today, yesterday it was 80, the day before 75. Uh Saturday, it's supposed to be 90. Woo-hoo! I'm super pumped. I hate winter, as everybody knows. Anyway, I our bathroom overlooks their yard. And so I was looking at their house and saw that a window was cracked open. And it reminded me of what you just said. It it triggered that. And and so maybe when as an adjuster, you're talking to the insured, you go, hey, Did a neighbor keep watch over the house, you know, even from the outside, get that name a number, maybe talk to that person, because I did think about texting my neighbor and saying, Hey, I think you have a window open. I can't I can't tell, but I I can see that it that the the sill and the you know bar is is apart, but I don't know if they have like you know storm windows on or whatever.

William Auten 22:26

Anyway, something that's yeah, having somebody having somebody to check in your property is is super important. Um there's automation too. I mean, we use um we have a uh a little thermometer in the house that communicates with the Wi-Fi, and I can monitor the temperature of my house from anybody anywhere in the world. Um we have that's that's kind of handy.

Chantal Roberts 22:50

Um that's the really super cool, and we should get them as sponsors. The the water notification things that we've talked about before. Yeah, yes.

William Auten 23:01

In fact, the ther the thermometer that we have is made by the same folks, uh, so I can monitor those water um sensors and the temperature uh on the same app. Because we have such an antiquated heating system, we can't use one of the fancy new programmable um thermostats that can communicate that way. But um, you know, there's a lot of those available today for modern systems. Uh, we just live in a really old house.

Chantal Roberts 23:31

So yeah. Um sometimes those things spit out a little blurb or whatever. For example, I know when I was working alarm or burglaries, you know, thefts, uh, the insured had to keep a or had to have a burglar alarm that reported to a central station or something to that effect, and it would have that open close notification. I would ask the insured to print off that open close report, you know, when they turned on the alarm, when they turned it off, that kind of deal. And so these uh temperature things may have a little report to be able to give you as adjusters that you could get.

William Auten 24:16

Yeah. Um mine, I don't know if you can see it here, but you can see a historical uh readout.

Chantal Roberts 24:23

Uh you can't see it, but uh but that's okay. See, this is why you should really watch the YouTube version rather than listening to Bill and my's great voice as we talk about yacht rock. The salty sounds, yes, the salty sounds of adjusting on yacht rock radio. Okay, anyway, that's gonna be an advertisement.

Severe Freeze Losses And Supplements

William Auten 24:47

I guess so. Uh let's see, what else we should we talk about here? Um okay.

Chantal Roberts 24:53

So what about if we have extreme cases of week, uh, you know, weeks of like we're going going through right now, you know, freezing, thawing, freezing, thawing, uh, which we've done here in in the Midwest right now.

William Auten 25:06

So um, yeah, ours hasn't been as extreme as as yours, but we've gone from um you know 15 to 16 degrees temperatures up into the 30s and 40s. Um, and that can make a pretty big difference. Um, but uh when it comes to to severity, you you could have a very minor freeze where you've got uh one pipe on an outside wall in an occupied house that froze overnight with no one knew, and then the next morning they woke up and there's some water coming from a weird spot that just you know uh didn't make any sense. And and you can have, you know, probably less than $2,000 in damage by the time you're done there, versus a uh similar case where the same spot freezes, but they're gone for two weeks, and then you've got water running down the staircase and freezing, and you go into a property and there's columns of ice from floor to ceiling. Um just yeah, and um and those claims can be very complicated because you may get the call when they just discovered it and it's still 15 degrees in the house, and you go there and everything is just covered in ice, and you can't even see what needs to be repaired because it's just covered in I want photographs of that. Oh, I have many I can probably send you.

Chantal Roberts 26:30

Okay, um, we're not gonna be able to share them because of confidentiality and all that kind of stuff.

William Auten 26:35

Sorry, yeah, yeah. I bet you if you hopped on Google, you could find some uh that that have been published by people who have experienced homeowners who've experienced that. But um, I've been in homes where the staircase is looks like a luge. Uh it's just complete the water just ran down the stairs and froze as it went. Um, the column of ice. I I have been in a basement where there was a column of ice that was like a four-foot tree trunk from the basement floor to the floor joys. Wow. Um, and every toilet in the place is cracked. And yeah, yeah, yeah. So when you get into a place like that, you you can assess, you can try and assess the damage as best you can, but you're not really going to know what is damaged until it all thaws out.

Chantal Roberts 27:22

Okay, so this is a good point, if I can interrupt you real quick. So here's here's the advice that I would talk to the adjusters about when they when either they get the report back from their field adjusters or they're out there writing the estimate right now. We've got insureds who may be represented by public adjusters, and then those public adjusters should should know and be able to converse with the homeowners. But let's say that we have unrepresented homeowners. This is when you, as an adjuster, will need to say, hey, I've got this estimate. We've written it as best as we can right now. You are going to have a supplement. You are. I mean, just point blank, period. So I'm going to give you money right now based off of the damage that we can see. Give this to your contractor, have them contact us once everything gets, you know, thought out. And of course, once everything gets thought out, we're going to have to send remediators out there to sop up the water and what have you. But the reason I tell you as adjusters this is because if we don't let the insureds know that there's going to be a supplement, they are going to think this is the only thing they have coming to them. Trust me, I have seen this in lawsuits where where and this is also the kind of thing where I see homeowners not wanting to begin repairs until all of the damage is estimated. And it's and it's almost counterintuitive. Like we we won't know what the damage is until we finish with the claim. Right. And and so you kind of have to trust the process. So, as adjusters, I am going to tell you this is the easiest way for you to do this is to go, here's your first estimate. This is just what we have written. It's going to thaw. We're going to thaw it out. You're going to thaw it out. Someone's going to thaw it out. Nature will thaw it out. I have no idea. And then we're going to come back and write another estimate, and you're going to get more money. Sorry to interrupt. I just wanted to.

William Auten 29:31

No, that's exactly what it that's exactly how you handle these. When uh when you you you can't always know that the well, here's another, this is not a freeze damage situation, but we've we have a lot of claims involving ice dams. And um when the roof leaks, people automatically assume there's damage to the roof. And there might be. Chances are there isn't in an ice dam claim, but there might be. And if there's eight inches of snow on the roof, we can't assess the damage to the roof, but we certainly can assess the damage to the interior. So go ahead, write that estimate. Uh, get that piece of the claim settled, and then um when the snow melts, reopen the claim, go out there and assess the roof and see if there's any roof damage. That's the that's the way to handle that.

Tenant Negligence And Liability Limits

Chantal Roberts 30:17

Absolutely. Yeah, so let's shift to uh liability. What happens if there's a tenant? Now I've got a great story about a tenant, and this was a this is a commercial property case that I handled as an expert witness, and I actually like to use it as a case study sometimes. So what happens when there is a tenant who maybe turns off the heat or turns it down really low or something to that effect?

William Auten 30:51

What happens? So if if uh if it gets cold enough to freeze the pipes, then the pipes may burst and cause water damage, and then the property owner will call his insurance company and make a claim. Um now he could make a claim through the tenant, and he could say, you have to pay for this damage now. That might be a long road to go. Uh, so you're better off um calling your own insurance company, and you'll have potentially replacement cost coverage that you can tap into. Uh you'll have to get your deductible, pay your deductible, um, but that's just the way life goes sometimes. So now what might happen is that your insurance carrier may contact that tenant and tell them, hey, we had to pay $74,262.38 here, and we would like you to write us a check to reimburse us for that. And the tenant calls his insurance company and says, Hey, they're coming after me for this money. Um, my liability policy, pick it up. And chances are it won't. And the reason is the there's an exclusion for um property in your care custody and control. And if you're renting the property, um, probably not going to be coverage for um water damage from uh freezing. Now, if you have coverage for fire legal liability, that'll pay for fire damage to the uh building if you start a fire, but which we are not recommending, by the way. Starting a fire or having fire legal liability coverage?

Chantal Roberts 32:27

Starting a fire to defrost everything, not recommending that at all.

William Auten 32:32

Right, right. Yeah. So um, but nonetheless, um, you might be uh you might not have coverage for the liability part of that. Now, to what extent they actually pursue that legally, uh, you know, it depends on the amount of the claim and and all that. But um, that's my perspective on that.

Chantal Roberts 32:52

Yeah. I just got a and this is what I was working on before we started the podcast. I just got an and uh question um from the big eye as one of their ask the experts, where the insured is a tenant, and I don't actually remember what necessarily happened, but uh it was a question about whether the tenant has an insurable interest in the leased space. And and I would argue that they do, but the agent was saying there weren't any insurance companies that were giving this tenant property damage coverage.

William Auten 33:38

Yeah, you wouldn't have you wouldn't have a line item for coverage on that, more than likely.

Chantal Roberts 33:43

Um but you do if the if the lease, I would argue that you do, if the lease makes you responsible, which most leases do, make you as the tenant responsible for the building.

William Auten 33:56

Well, for betterments and improvements, um you would have coverage for those items that you as the tenant installed in the building. Um, but the stuff that was already there before you arrived, that's I believe that would be excluded. Well, then it would certainly be excluded from your property coverage. When I talk about betterments and improvements, that's actually afforded under the business personal property section. So it's not a liability coverage, that's actually a first party coverage.

Chantal Roberts 34:27

Yeah, I'm sorry, I switched topics on us.

William Auten 34:29

Yeah. That's how I lose my hair when you switch up bulletcats.

Chantal Roberts 34:33

I'm sorry, I'm sorry. I just, it's like squirrel, and I'm off on another tangent. But that's uh a current topic that I'm I'm thinking about right now. Although we still we always argued that there was some kind of insurable interest when the contract is, if I recall correctly, doesn't the liability policy the the commercial liability policies take into effect? And I had to look at I'm I was in the process of looking it up, uh take into confect uh take into consideration, I guess I should say, the contracts that you have signed and the responsibilities that you have signed.

William Auten 35:20

Well the contractual liability portion of it, um I I don't think that supersedes any exclusion, and I don't think it supersedes the care custody control exclusion, and I believe that exclusion I can't recite it, unfortunately. I can't either. That's I have a setting up. Um but I think it has language in there about property that you rent.

Chantal Roberts 35:49

Okay.

William Auten 35:50

Or lease.

Chantal Roberts 35:51

I still have to look it up, but hey, if you know the answer, be sure to drop it in the comments and let us know, tag us on LinkedIn or something like that, and go, you guys are a bunch of idiots.

William Auten 36:02

So what I yeah, I would love to hear that. I I hear that every day from other people.

Chantal Roberts 36:06

But we want to hear it from other people.

William Auten 36:08

We want to hear it from a whole batch of new people.

Chantal Roberts 36:10

Just a whole bunch of people. Just let us know and be sure to like share this episode with other people and go, look at these idiots. I mean, why are we listening to them? Or moreover, listen to these guys. It's comedic effect because these guys are a bunch of idiots. So either way, we get a lot more subscribers that way, and I'm all about it.

William Auten 36:29

I want to know though, I and I've not really looked into this um in detail. I've had claims where we insure an apartment building or or a rental property of some uh residential sort, and a personal tenant is uh is living in there and they cause damage uh by allowing the pipes to freeze because they turned the heat off or didn't pay their bill or whatever. And I I don't remember, and I don't remember because I've never really seen a carrier pursue that tenant. You know, if you've got a tenant living in an $800 or $1,000 a month apartment, chances are they're not gonna have the assets to pay for, they might have insurance coverage, whether or not it would protect them in yeah, maybe they do. Um what is what does the H04 say about it?

Chantal Roberts 37:25

Okay, so I have an answer. It might not be the answer. So we had looked into this uh and it started off coming with is an apartment vacant or is it unoccupied when we were looking for property damage, and most of the time it came back to being unoccupied rather than vacant. Now that's a whole again, whole different podcast. But the the point is one of the things that we learned when I was a claims adjuster way back when is that a lot of states will say if the landlord uses the rent to pay for property insurance coverage, then we really can't pursue the tenant as someone who's at fault. They it wasn't like the legislation was saying that the tenant is an additional insured, but it was kind of saying the tenant was an additional insured. I mean, it just didn't come right out and say, and and and I'm specifically thinking of of Oklahoma. I know Oklahoma has a rule like this that if the insured uses their rent money to pay for the property insurance, we can't pursue that tenant who may have caused the damage. Now, I I'm sure we could pursue that tenant's insurance if they had it, like the H04, but them themselves, if they don't have it, that is what Oklahoma says no to.

William Auten 39:25

Interesting.

Chantal Roberts 39:26

Yeah.

William Auten 39:28

Well, um I am I'm looking at an H04, the liability section here, and uh there's a lot to a lot to absorb here. So I'm not gonna uh render an opinion on on whether or not a renter's policy or an HO4 would cover a negligent tenant if they allowed the pipes to freeze. Um my guess is that it might. So I would but I don't know. I don't know that there's a similar exclusion as to um that would be under the commercial policy. That's why.

Key Takeaways And Next Topic Tease

Chantal Roberts 40:04

Yeah. Um, so I would say that we've we've kind of beaten this to a pulp, yes? Yes, we've it's a it's a wrap.

William Auten 40:14

Beaten the icicles out of it.

Chantal Roberts 40:15

Yes. The it sounds easy, it sounds simple. We gotta remember that freeze, freezing whatever conditions are a covered property or a covered cause of loss. Yes. And so if a pipe froze, that pipe may also be covered. So we gotta remember that in addition to the ensuing losses. Right. But in the summer, when we have an accidental damage or burst or whatever, that's when the pipe has been like worn out.

William Auten 40:52

Yeah, compromise the corrosion or so now if it's impacted by something, like uh somebody drives a nail through the wall and it hits the pipe, and and um that's that would be covered. That would be covered. That's not uh well, it is accidental discharge. So I gotta do that.

Chantal Roberts 41:10

But what is the cause? What is the direct cause of loss? The direct cause of loss would be the nail, and if it's not excluded, it would be covered if we're using an HO or excuse me, a CP 1030, a special form causes of loss, right? Regardless, we would be pursuing the nailer for subrogation, right? Yeah.

William Auten 41:34

Unless it's a tenant, then it's probably well, you still could pursue anyway.

Chantal Roberts 41:38

Yeah, anyway. See, we we're gonna get back into the like spiral again.

William Auten 41:42

And right so next it always takes me back to the forms, though. Whenever we whenever we get into these little questions, I'm over here on Google looking up the the policy form which is which is trying to put a good trying to do a coverage analysis while we're both talking at the same time.

Chantal Roberts 41:58

So super hard, which is a good point, though, because everything is driven by the policy, right? And and so as an adjuster, that's again, that's exactly what you have to know. Also, what you have to know is our next episode will be uh uh airing on April 9th. It is going to be about spring storms and property claims. Woo! Yes, all the thunder and lightning, very, very frightening.

William Auten 42:24

Lots of wind.

Chantal Roberts 42:26

Mm-hmm. Yep, lots of wind.

William Auten 42:29

Maybe some hail.

Chantal Roberts 42:30

Oh, lots of hail. We actually had some hail uh here in Kansas recently.

William Auten 42:35

Oh, yeah. I um uh one of uh one of the cat adjusters that was helping out here had uh mentioned that and and got in his truck and took off. So he he's he's out there doing hail claims now.

Chantal Roberts 42:50

I am thinking about putting a note on my front door saying, Dear roofing salespeople, we're both adjusters, our roof is fine because everyone who's getting a new roof around here, they have all of their all the insurance or all the roofing companies send their salespeople around to knock on doors and say, let us take a look at your roof. No, no, we're good. Yeah, we're good, we're adjusters, we're good. And then they slowly back away from us in fear, which is fun.

William Auten 43:21

Yeah, so that wraps up uh another fun episode, right?

Chantal Roberts 43:26

Absolutely, yeah. So we will see you on April 9th.

William Auten 43:30

April 9th. Thanks. Take care, we'll talk soon.

Chantal Roberts 43:33

Okay, bye.

Subscribe And Where To Find Us

unknown 43:34

Bye.

William Auten 43:35

Thanks for joining us on the Art of Adjusting Podcast, where we talk about life as an insurance adjuster. Hit that subscribe button real quick and tell all of your adjuster friends to check this out as well. For independent adjusting services, go to www.autin.claims. And for anyone interested in working as an independent liability adjuster, go to the contact us tab to join our roster.

Chantal Roberts 43:58

So this wraps up another. Art of Adjusting podcast. If you enjoyed this podcast or this episode, please give us five stars and a review. It does help the algorithm pick us up. In the meantime, you can contact me at theartofadjusting.com for consulting and training purposes.