Nobody loves having to file a claim for property damage, but at least your insurance will cover it, right? Well… maybe.
As some property owners recovering from hurricanes in Texas and Florida are learning, just because you’re covered doesn’t mean you’re covered. Depending on your policy, some forms of damage may not be eligible for insurance pay-outs, and you may not even suspect until your insurance adjuster asks for a cause and origin investigation.
After any type of property damage, the owner’s first step is to call the insurance company. The insurance company sends out an adjuster, and the adjuster usually determines whether the damage is covered and at what level.
Occasionally, however, the adjuster may have a question about the source of the damage, and may ask the insurance company to order a cause and origin investigation. As its name implies, a cause and origin investigation is designed to determine both the cause and the origin of the property damage.
The origin of damage refers to where the damage began. For instance, in a fire loss, the origin may be behind a stove or in a fireplace or in the middle of a room. The origin can provide clues to the cause.
Damage will generally have both an immediate cause and a proximate cause. The immediate cause might be a short circuit in the electrical system, and the proximate cause might be owner neglect, or it could be sabotage, or it could be faulty wiring. Understanding the origin and cause helps insurance companies determine whether the damage is covered under your policy or not.
For instance, if a tree falls on your house and destroys the roof, that damage is probably covered by your insurance company, including any water intrusion from the hole in the roof.
However, if your roof springs a leak during a storm with no obvious immediate cause such as a tree falling, a cause and origin investigation may be ordered. If it’s determined that your roof was not properly maintained, and that the damage was caused by owner neglect, your policy may not cover it.
After Hurricane Katrina, many homeowners found out very painfully that their insurance coverage did not include flood damage. The same thing is happening again in Houston and across Florida in the wakes of Harvey and Irma. Flood insurance has to be purchased separately through a federal program, and many homeowners never get around to it or simply don’t know that it’s necessary.
Whether a homeowner has flood insurance or not, a cause and origin investigation following storm damage is often necessary to determine who is responsible for which damage.
Flood damage can usually be identified because it creates lines in the drywall and other materials similar to the ring in a tub. But not all water damage is flood damage. When the water is blown by the storm into the structure through windows, walls, and roofs that have been breached, it is considered wind-blown water, and usually is covered. This type of damage will tend to be cleaner than flood damage and to have a splatter pattern rather than forming a ring.
A cause and origin investigation helps insurance companies determine which insurance policy is responsible for which damage, and where the homeowner may be out of luck.
If your insurance adjuster calls for a cause and origin investigation, it’s not time to panic yet. They may simply want clarification on a question, and the damage may still be covered. Likewise, it’s neither necessary nor advisable to attempt to influence the cause and origin investigation in any way. Doing so won’t help your case, and could make the investigator suspicious of wrongdoing.
Cause and origin investigators are independent 3rd party firms with no direct affiliation with the insurance company and receive the same compensation regardless of what their investigation turns up. When they arrive, they may or may not wish to interview you and other tenants or witnesses. They will then walk the premises searching for origins and causes.
It’s important to understand that a cause and origin investigator is not affiliated with your insurance company, and they generally cannot answer questions about your policy. They will file a report with the insurance company stating their findings in regard to the cause and origin, and it is then up to the insurance company to determine whether, based on that information, the loss is covered by your policy.
You do have the right to appeal the decision, but be wary of firms that offer to take your case to litigation. Many of these firms will gladly take on your case even if it has very little merit, in hopes of wearing your insurance company down enough to reach a settlement. In the end, these settlements rarely benefit the property owner as much as they benefit the attorney, and they can sour the relationship with the insurance company.
Before investing in litigation, it pays to read and understand your policy carefully and to read and understand the cause and origin report carefully to determine whether you have legitimate cause to appeal.
If you have a question about cause and origin investigations, please visit GLE’s cause and origin webpage or contact one of our experts today.