Four years ago, I had a flooded basement in one of my rental units, some cooling system breakdown in the furnace room. It was my first time dealing with a house insurance claim. My only prior exposure to insurance claim was for my car a few years before. Somehow I forgot to check if anyone was parked at the end of my driveway before I backed out!! Anyway, back to the house, I pretty much let the adjuster and contractor take care of everything back then. I did check on the progress once in a while but my involvement was very minimum. I figured I could trust them! WRONG! I wasn’t too happy with the finished product, I felt they cut corners a lot but had no proof. So, last December, when a second flooding occurred (what are the odds!), I was prepared! Here is what you should do if you ever have to deal with a rental property insurance claim.
First – Make Sure You Have Rental Property/Landlord Insurance!
If you have any kind of rental property, get insurance! Just for the liability portion, it is worth it. My insurance for the rentals is cheaper because I own condos. I pay around $270 annually for each unit and I shop around before every renewal.
If you rent space in your own home, make sure to check your homeowner policy to ensure you are covered. You never know what a tenant can do!
Potential Claim, Call The Insurance Right Away!
If something happens, like a flooded basement, don’t wait and try to figure out who to call, what to do, call your insurance right away and they should be able to help you. At least get the claim process started. Even if ultimately the damages are not covered, you didn’t waste any time. And sometimes the adjuster can be very helpful. When I had my burst pipe in December, I couldn’t get a plumber (too many burst pipes in town!) or a restoration crew but my adjuster was able to get both within a few hours.
Go Check The Damages
I highly recommend you go check the damages before the crew starts cleaning and fixing things. I sort of did for my first claim but didn’t pay enough attention to details. Take lots of pictures and take samples if needed. For example, this time I took a piece of the damaged laminate floor so I knew the exact color and thickness. I didn’t do it for the first claim and I don’t think I got the equivalent product. Also walk thru with the contractor and ask questions about damages. I noticed my furnace room was flooded and the contractor didn’t pay much attention to it. I requested they send someone to check the water heater and the furnace to ensure nothing had been damaged due to the flooding. It was not on his recommendations!
Meet The Trades
I know it sucks because it’s time-consuming! That’s why I didn’t do it the first time around. This time, I tried to meet each trade, go over their work order and see if I agreed with the plan of action. For example, the carpenter was going to replace my ceiling tiles with commercial lower grade ones, I told him it wasn’t an option. I also asked him about the paint grade he was going to use and told him he would need to upgrade to match what I used previously.
When I met with the “flooring guy”, I had my sample with me and we compared with the laminate he was planning to install; color and thickness. He ended up upgrading my floor!
Get The Trade’s Business Cards
Or at least get their contact information from the contractor. It is hard to find good help these days, if they end up doing a good job, you can add them to your list of professionals to contact when needed. When you have rentals, something always comes up! And if they do a bad job, you will remember never to call them!
It’s A Business. Treat It Like One
The flooding happened on December 28th, 1 ½ months ago! When I first met the contractor he said it would take up to three weeks. While my tenants are very patient and understanding, they did lose the use of the basement during that time (they use it as a bedroom). Good tenants are hard to find and I don’t plan to lose them because of a poorly manage insurance claim.
So for February, I gave them a $200 credit towards their rent. Sometimes you need to spend money to make money. If they move out, the vacancy will cost me a lot more. I didn’t feel it was enough so I reached out to my adjuster and explained why I felt they should reimburse my tenants for half the rent until the work is done! They agreed! I did make a good argument! Way to motivate the insurance to move faster
I also requested a reimbursement for the electrical cost of operating all the machines when the restoration crew was drying the basement. Insurance companies have a standard rate but sometimes you need to remind them to pay.
Anything Else You Need Done?
I had a couple of small outstanding jobs to do so, when I met with the carpenter, I asked him if he could take care of it at the same time and how much it would cost. He did it for free. I kept his business card!
Check the progress regularly and follow-up if anything is wrong.
When I went to check the laminate floor installation, I noticed a piece was missing between the basement and the laundry room. No reason not to get it fixed! They also damaged the wall while installing, guess who has to come back now??? All small things but they do add up and it’s never cheap to get it fixed later.
Keep your tenants informed! My tenants have been very patient, partly because I update them regularly. Communication is key. I also thank them for their patience and understanding every chance I get. It is very disruptive to their routine with all the various trades in and out of the house, and it has been over a month. Always treat them with the same respect you would expect in their situation.
Don’t Solely Rely On Your Tenants
My tenants are great but they don’t own the house so where they may see a little scratch (because they just want the work to be over), it can actually be a much bigger one! Unless it will affect them in their day-to-day routine, they may not check that closely.
Don’t sign off on anything until it is ALL done.
- Request a final clean-up!
- When installing my new appliances, the contractor’s installers forgot to remove the bolts in the back of the washer (needed for transportation to stop the drum from moving). When my tenant used the washing machine, it went “wild” and damaged the dryer and the wall! I am now waiting for new (again!) appliances. I will sign off on the work once it’s ALL done, they could still damage the wall when moving the units.
Keep track of everything and document along the way. Get things in writing as much as you can. You never know when you may need it!
I will be glad when the work is completed and so will my tenants. It hasn’t been too bad to manage but it is time-consuming and I wouldn’t mind a little break from the rentals before I have to start looking for new tenants for one of my other units.
I was also hoping to get a little extra time to look into a fiveplex!!! Totally different ball game when you get into commercial properties, so much more to learn! Not sure I am ready for it but totally pumped to learn more about it! More content for a future post!!!
Did you ever have to deal with a rental property insurance claim? What was your experience like? Did you find this post helpful?