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Property Damage Claims Caused by Water or Fire

Today it rained as hard as I can remember in the Yonge/Sheppard area of North York. No thunder. No lightning. Just a lot of rain, with a sprinkle of hail for good measure.

As a result of the heavy rain, our office experienced flooding in the basement. It was pretty bad. All hands were on deck, doing our best to mop up the water and prevent further damage.

The resulting water damage got me thinking about all of those people who experience property damage on account of water, fire, wind or other natural (or unatural) causes.

What do you do when this happens to your property?

What steps should you take in order to protect your rights and preserve your interests?

All good questions.

Our law firm handles a lot of property damage claims. These are claims specifically related to damaged property. So, not cars which are damaged in car accidents. We are talking about damage to one’s home, office, or place of business; along with all of the equipment, chattel and contents contained therein. I repeat  that damage sustained to your vehicle as a result of a car accident is not applicable to these claims thanks to some provisions contained in the Insurance Act.

For starters, the question needs to be asked: Do you own or rent the property where the damage took place? If you are a renter, then the property damage is the owner’s responsibility. However the contents and equipment which were damaged are your responsibility. If you are a renter, it’s important to have rental insurance, business interruption insurance, or some form of insurance which will cover the contents of your unit which were damaged.

If you have no insurance coverage, then you may be out of luck. You cannot sue Mother Nature for a bad storm. The case against the owner would be a tricky one as well (albeit not impossible if you can show some degree of knowledge, neglect and negligence resulting in the damage to property). It all depends on the facts of the case.

If you own the property, then do you have property insurance. Chances are that you do. The first step would be calling your insurance broker, agent or the insurance company itself to report the property damage.

It’s a very good idea to take as many pictures as you can.

Take photos of the water, fire, wind, or whatever caused the damage. If you have a flood, take photos/video of the flooding or running water. The same thing applies to fire.

Take photos of the damage caused to the property and the damaged equipment/chattel. Take an inventory of what got destroyed.

After you have reported the claim, the insurer may assign the file to an independent insurance adjuster and an independent remidiation/restoration crew. That crew will get to the property rather quickly to find out what can and cannot be salvaged. In the case of water damage, they will come around to with industrial fans, dehumidifiers and any other equipment to soak up the moisture, so that the property does not incur further damage and is perhaps livable again.

The independent adjuster will seek to investigate the root cause of the damage, assess if it’s an insurable loss and attempt to put an estimate on how much money it will cost to repair.

At the same time, it’s not a bad idea for the property owner to consult with their own contractor to assess the value of the damage and attempt to put a dollar figure on how much money will be needed to get the property back to where it was.

Sometimes people and insurance companies agree on the extent and value of damage done; and the parties can agree with a number, agree on a contractor, and get the job done. That happens more than you think. In our experience, there is not as much bitterness, animosity and conflict between property owners and their property insurers. The insurers generally pay up, and the property owners just want their properties restored. The job eventually gets done, and everyone can go their separate ways.

Sometimes this is not the case. An insurer may dispute that the loss is not covered under the policy; and refuse to pay out on the claim.linkedin-2-300x300

We often see this when a property owner is not forthright with his/her insurer. They might tell the insurer that the property is being used as a single family residential home, when in fact they are operating a business out of the basement; or renting the unit out to tenants without telling the insurer. Perhaps the owner tells the insurer that the home is their primary residence, when in fact it is not and it is being used as a rental income property. Perhaps there was a sewage backup and sewage backups are not covered under the policy of insurance. Or, maybe the damage was caused by a fire, and the fire is suspected to be as a result of arson. There are a number of different reasons for an insurer to deny coverage.

Things get trickier in commercial or industrial situations where there is damage to contents or equipment. The insurer will have a valuations expert come out to assess the damage done, and estimate the fair market cost of the damaged equipment. Sometimes the equipment can be repaired. But the equipment may not work as well as it did before. The cost of commercial equipment can be very significant. It’s in an owner’s best interest not to rely on the insurer’s valuation. Instead, they should retain their own valuation expert to prepare a report to get a dollar figure on the damage. What you will often see is that that valuation put forth by the insurer’s expert is significantly lower than the dollar figure of the property owner’s expert. When the cost of the damaged equipment can be in the hundreds of thousands of dollars, this is money well spent by the insured property owner.

If the parties can’t agree to a number, that’s when you need call a personal injury lawyer who handles these sort of claims. Make sure that you aren’t taken advantage of and protect your rights.

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