Water Damage Case Study


We received this loss in May 2018, approximately 5-months after the loss event.

The homeowner was frustrated that during the 5-months, he felt that he had been grossly underpaid for his damages and he wasn’t making any progress with his insurer, State Farm.

In the days leading up the loss event, the policyholder was on vacation from New York in Florida. While away, the major freeze of 2018 occurred with several days of sub-freezing weather.

While he was away, his tenants complained about a lack of hot water and problems closing their doors. The policyholder hired a plumber to investigate the situation. When he arrived, he found that a pipe had frozen and burst in the basement bathroom and water was flowing everywhere.

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The Damages

The water spread from the bathroom into the garage, kitchen, hallway, sunroom, and then under the house below the slab.

This property is a three-story dwelling that overlooks the Hudson River in Yonkers, NY. The force of the water below the home caused the property to the shift on its foundation.

The bathroom, which was comprised of an imported mosaic tile, premium fixtures, a garden tub, and a pocket door was ruined. was In the kitchen, the custom cabinetry, granite countertops, and built-in appliances were all unsalvageable.

The imported tile flooring and underpayment extending from the kitchen into the sunroom required full replacement as well.

Several doors required replacement. After the walls, flooring, cabinets, fixtures, and moldings were replaced. Paint and staining would be required as well.

For these damages, the policyholder received a check from State Farm for $5,000.

The Claims Process

When the policyholder contacted us, he was awaiting a forensic engineering report by Dewberry Consulting to determine if the cracks on the second and third floor, and the misaligned windows and doors were the result of water flowing under the house.

In the 5-months since the loss event, he had not heard anything back from State Farm regarding this matter.

When we began working on this claim, we explained to the policyholder that the process will take more time due to the age of the claim.
With old claims, the first step in the process is always to gather all the information that had been acquired to-date.

We got our letter of representation signed and we promptly followed up with the with State Farm to discuss the claim and to get started addressing the damages.

It took some time to get in touch with the adjuster, who is ever-evasive. After a couple of weeks, were finally able to procure the engineers report which had just been sitting on the adjusters desk and he had done nothing about it.

We reviewed the report, which found inconclusive evidence that the damage to the second and third floor related to settling caused by the water from the pipe break. The engineer requested further testing that would cost around $10,000.

We pressured State Farm to hire another engineering firm to investigate the damages.

Moving forward, we decided to take a 3-pronged approach to the claim.

The interior water damage in the basement would be the first part.

The settling and cracking damages in the second and third floors would be the second part.

The personal property items would be the third and final part.

We organized the parts of the loss in order of their magnitude.

Estimating the Damages

To estimate the damages to the twist made the world images to the dwelling, we engaged Empire Estimators a company that specializes in insurance restoration estimating.

We visited the property and completed a thorough walk-through which included taking pictures, measurements, and acquiring all the documentation necessary to create a detailed line item estimate that addressed every area of damage.

The estimate included the water damages and it also included the damages from settling.

Fortunately, most of the repairs to the upstairs were cosmetic and could be repaired with drywall and paint.

Most of the damage occurred to the basement itself.

The total estimate for repair was around $110,000.

We submitted the estimate to State Farm and the adjuster worked internally to review the estimate.

After he and his managers took over a month to review the estimate, a re-inspection was scheduled with the adjuster at the property.

At this inspection, we detailed all the additional damages claimed.

The adjuster reviewed the scope of work further with his management and in a month made an offer.

However, the offer was unacceptable because they took an unfair amount of depreciation in their calculations. We pushed back and State Farm agreed to adjust their offer.

After we accepted the offer for the basement damages, I requested an undisputed amount for the water damage in on the basement issue ASAP while we awaiting the decision regarding the damages on the second and third floors.

The adjuster hired another engineering firm to perform an analysis of the property to determine if the damages to the second and third floor were the result of settling induced by the water from the pipe burst.

Coverage Determination

The forensic engineer’s report took about 2-months.

It was a very detailed report that included building codes, geologic information, historical property records, and other information.

Ultimately, it was determined that the cracks to the second and third floor were indeed the result of this loss event. However, the State Farm policy was written with concurrent causation language which stated that damages from settling were not covered regardless of the cause of loss.

Therefore, State Farm denied paying for that portion of the loss. The policy is a contract and unfortunately we cannot change policy language and we must advocate for the policyholder within the policy boundaries.


Our efforts with this claim were a tremendous success. State Farm’s initial offer was $5,000.

After fighting for the policyholder to achieve a maximum claim recovery, we settled for over $75,000 — an incredible 14X increase for the policyholder.

If the policyholder had never contacted us and attempted to handle the claim on his own, he would not have never achieved this outcome.

In fact, without us, as with many other policyholders, they excepted the initial lost payment. When they do that, they don’t get the money they need to repair their home after a loss of it, and the insurance company allows all the way to the bank.

Key Takeaways

Loss adjustments can take time.

The process is like navigating a massive ship. The decisions that you make now may seem small but they can have a huge impact on where you ultimately land.

Accurate estimating is critical.

Research takes time and is very important.

The importance of following up cannot be overstated.

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