Rental properties

What To Do When Dealing With A Rental Property Insurance Claim

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 Regularly!

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.

Communicate!

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.

Final Inspection

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.

Document Everything

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!

In Summary

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?

22 thoughts on “What To Do When Dealing With A Rental Property Insurance Claim

    1. This contractor is particularly difficult to deal with, no regards for my tenants or I. That’s probably why I am pushing back so much!
      5plex…just for you Tom:) I know you like rental stories!

  1. I wonder if your carpenter is willing to travel??? Ha, finding someone you can trust is always so hard. And you’re right, that you have to stay on top of things or you get burned! I definitely have learned that lesson the hard way. Glad this situation is proceeding so well for you. I can’t believe the insurer is covering half the tenant’s rent during the construction, that’s awesome! 🙂

    1. Hi Kat, you must have quite a few stories to share too? Yes that was pretty awesome on the rent. I am letting my tenants know once the money has been paid. I don’t always trust the insurance:)

  2. I’ve never had to deal with an insurance claim personally, but work generally in the construction field, so I know VERY well the importance of lots and lots of pictures. It will feel stupid taking so many up front until one day you find that weird corner shot is exactly what you need to prove how things were at a certain time.

  3. Oh wow. Indeed, that is quite the headache to deal with!

    Great business etiquette giving them a break on their rent. I knew a similar situation where we had friends renting and the basement flooded. It damaged some of their personal items, they had to cram it all on the main floor, then they were still paying the full price of occupying the whole space! The landlord was almost offended they asked for that to be deducted. Hello – they were occupying 600 square feet less! It was such a mess – they got their personal things covered and eventually moved after getting a credit back on their rent.

    Sounds like you have lots of experience though and aren’t afraid to take the contractors on! Great job!

    1. Thanks for sharing your friend’s story. I think when you have good tenants, you should do what you can to keep them happy. The credit I gave them was not much but it went a long way:) I can’t wait to see their reaction when I give them half the rent back!!!

  4. Very nice and business savvy of you to give a $200 deduction for rent- good incentive for your tenants to continue their tenancy.

    Thanks for sharing this information. Sounds like a lot, I don’t know If I could handle all that haha.

    Fiveplex, that was my dream before, (or really a 4plex or duplex) to live in one and rent out the others. Looking forward to reading more about your experiences.

  5. Real estate is such a nightmare, we can wait until we sell our. There was HVAC work that came up and I’m just like…you can’t pay me enough for this. Not my thing. I don’t know how people do it, the stress! And I have the worst luck with contractors.

  6. Very good check list, Caroline. I know, for the contractors, we need to get involved, and make sure the work meets the expectations. I never had experience with adjusters. Good to know how to work with them. A lot of details need attentions. I’m glad to hear the repair work is done for your rental.

  7. Hey Caroline,

    You’re right, supervision and attention to detail are critical! I used to do work for insurance companies and while I wouldn’t call them “bad”, the reality is that their financial interests in the event of a claim are not aligned with the policyholder’s. So, unfortunately, it’s often necessary to supervise the details and document everything.

    1. Thanks Miguel. My Field adjuster hasn’t been to the house at all since the flooding! Hard for him to know what is being done or not. So while he may not be “bad”, you are right his interest is not aligned with mine! Thanks for dropping by.

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