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Last Post 02/01/2010 1:12 AM by  Ed Bailey
Freeze loss Coverage Question
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Ray Hall
Senior Member
Senior Member
Posts:2443


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01/31/2010 5:53 PM

    This is a Texas Claim under a Texas HOA-modified which is the most sold policy in Texas after the mold gold in the early 1990`s This policy is named peril and accidental damage by frozen pipes is covered with the due dilagence conditions, namly heat in the building OR the water turned off and the pipes drained. No question the house was un occupied

    This was presented to me at church this morning by the agent of the insured. The named insured is a single man , age 50 who lives in a small 2 BR one bath house alone. He was sent to prison for Income tax problems in October 2009. His elderly parents prepaired the house for a long un occupied time. They locked the house, turned off the power, gas, phone, cable TV, the water and sewer and drained all the faucets and hose bibs in the house. This was witnessed by another neighbor who used his shovel to uncover the water meter, this same neighbor witnessed the "winterization of the house from freeze"

    About Jan. 9th 2010 the neighbor heard a sound and saw water coming out of the soffit vents. He went inside with his key and found all the floors under 2 inches of water and the ceiling on the floor in two rooms. The building and contents have about $15,000.00 damage.

    Investigation revealed the following this. is older neighborhood has the old type water meters that have to read by a meter reader(somewhat like a roof thumper) the city contracted with a sub contractor to replace all the meters with a battary read/transmit. A notice was mailed to all the houses and the notice was still in the mail box. It seems the subcontractor turned the water back on a day orhe  do before the freeze.

    Now don,t holler benefit of doubt. The facts and contract is clear. Don,t say pay and subrogate against the sub-contractor. The contract is clear and it does not cover any consequential  damage from any event. I did not tell the whole truth, this is now my losses to make a recommendation on.Both Steve's, Leland, Tom, and Randy Cox, Bob H and others who can think, I think this is a good training topic.

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    OdieWyatt
    Member
    Member
    Posts:56


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    01/31/2010 6:42 PM
    I think I see more HOB's and HO3"s now than HOA+, and more so each year.

    The HOA+ I am looking at excludes freezing, unless you have used "reasonable care to maintain heat or shut off the water supply and drain..."
    I think reasonable care to drain occurred. I do not think checking the water everyday to make sure someone did not turn it back on is "reasonable".
    Unless a "substantial part of the personal property" was removed, I see a probable covered loss.
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    Leland
    Advanced Member
    Advanced Member
    Posts:741


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    01/31/2010 6:44 PM
    please print the exact policy language, thank you. There is a difference between saying that the insured has a duty to winterize and saying that the house must be in winterized condition. I would like to see the exact wording.
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    RandyC
    Member
    Member
    Posts:197


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    01/31/2010 10:53 PM
    I'm inclined to agree with OdieWyatt that reasonable care was taken. However,there will probably not be any subrogation. I'm an electrician not a plumber, but I think most water companies service agreement requires the member or subscriber to maintain cut off valves behind the water meter. They usually reserve for themselves the right to control the valves in the meter box. That is boilerplate language to protect them from unwanted liability.

    However....they do often imply to the homeowner that he can cut off at the meter and even show them how! That could estop them to relying on that requirment...but maybe a lawyer could comment on that.

    The carrier could stand on the failure of the homeowner to maintain his own cutoff. I would try to get them to cover, but it would be their decision.

    Below is language from the HOA Amendatory endorsement

    SECTION I — PERILS INSURED AGAINST

    15. Sudden and Accidental Discharge or SECTION I — EXCLUSIONS
    Overflow of Water or Steam from within a
    plumbing, heating or air conditioning system
    or household appliance.

    d. We do not cover loss caused by or
    resulting from freezing except as
    provided in Peril Insured Against 16.
    Freezing.

    16. Freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or of a household appliance.

    a. This peril does not include a loss caused by or resulting from freezing

    If you have not used reasonable care to:
    (1) Maintain heat in the building; or
    (2) Shut off the water supply and drain all systems and appliances of water.

    I think "reasonable care" was taken, but one could argue that they need to comply with water company requirements to maintain a cut off behind meter....not ahead of meter. That language is apart from the contract...so I don't really know.
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    Ray Hall
    Senior Member
    Senior Member
    Posts:2443


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    01/31/2010 11:25 PM

    excellant Randy I will look at the cut off, and I agree with you the insured did what was reasonable. I really feel its the IRS to blame for moving this guy out when a cold winter was coming to Texas

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    RandyC
    Member
    Member
    Posts:197


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    02/01/2010 12:14 AM
    When I worked Ike I only had a handful of these old policies. I had a copy of the policy, but not the endorsements. I had carrier guidelines which were different from the policy language. Agents were reading the policy without the endorsements, and I didn't have the endorsements or the original policy.

    My managers quoted guidelines like it was policy, but a couple of policyholders stood by the policy...not the guidelines. I was caught in the middle. Finally, I was given the endorsement and was able to read the guideline language to the homeownerfrom the endorsement. The agent found the same endorsement in some old papers of the policyholder and the claim was closed.

    There's almost always a reason for the guidelines, but those words do not impress an unhappy policyholder. They want to see policy language!
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    Ed Bailey
    Guest
    Guest
    Posts:34


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    02/01/2010 1:12 AM
    If the Insured had notified the water department to discontinue service, subrogation may have been reasonable.
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