Ice Dam Aftermath: Insurance Essentials

Many people had ice dams this winter and are now repairing the resulting damage. At the Boston Building Resources annual meeting on June 4, Mario Vargas of Vargas & Vargas Insurance spoke about insurance coverage for ice-dam-related repairs. Here are some of the highlights:

Mario Vargas (left) spoke about post-ice-dam insurance claims at BBR's annual meeting, where he was joined by panelist Flemming Lund (right).

Mario Vargas (left) spoke about post-ice-dam insurance claims at BBR's annual meeting, where he was joined by panelist Flemming Lund (right).

Take the time to solve the root problem.

Some contractors may just want to “get the job done” by repairing damages quickly and moving on, but this will not serve you well in the long run. It’s important to solve the problem at its source. “You may get things fixed this year, but if you get ice damming the next year and the next year, and this pattern continues, your insurance rates will go up or you will be non-renewed because you’re filing claims on a regular basis,” Mario advises. Before forging ahead with a repair, take the time necessary to step back and assess the situation to find out what is causing the problem in the first place.

Get a building permit.

Some people don’t get permits because the job’s not that big. But the building inspector can be your ally, especially when a contractor is eager to move the job along. “Don’t shortchange yourself,” said Mario. An inspector will want to see the root problem solved and improvements made to bring the property up to code.

Sometimes, damage is not visible until the repairs get underway and the wall or ceiling is opened up. “If you engage the building department, and they identify areas where you need to bring it up to code, you bring the insurance adjuster back and let them know,” said Mario. Then these fixes will be covered.

Insurance will cover code-related improvements.

If you open up a wall to fix water damage and are touching older electrical or plumbing systems, those systems need to be brought up to code before the wall can be closed up again—and this is covered by insurance. “In all one- to four-family homeowner policies, you have what you call code upgrade,” said Mario. “If you need to pull down the ceilings, pull off some walls, and you’re going to touch the electrical or plumbing systems, legally, you have to bring those up to code. Your policy covers that, but often that is not shared with consumers.”

Coverage for code upgrades is at least 10%, or as much as 25%, of the overall coverage of the home. So, if you have $100,000 in total coverage, there will be at least $10,000, or perhaps as much as $25,000, in coverage for code upgrades, depending on the policy. Find out what the building code requires by consulting the city or town building department. “It’s covered by the insurance, so let’s do it the right way,” said Mario.

Mario recalled one example where repairs were needed after water damage in a kitchen. “But the building department said you need fire doors between the kitchen and these other rooms. That inflated the loss by $6,000 to $7,000, but the insurance company had to cover it.”

Insurance companies look upon one large claim more favorably than many small claims.

“If you have one person with one claim equaling $100,000 and another person with seven claims over a five year period equaling $20,000, that second person will be non-renewed,” Mario said. Insurance is intended for major emergencies, not for maintenance or wear and tear.

Initial and supplemental payments

The first check is not a final settlement. “It is common for supplements to be paid out when, for example, the builder starts working and finds something that they didn’t see initially,” Mario said. The insurance adjuster may come back out in person, or sometimes they will just send a check for the difference.

Replacement cost

Standard homeowners’ insurance policies cover replacement cost, meaning that the building has to be restored to what it’s like today. “Let’s say a kitchen cabinet is damaged by an oven fire,” Mario said. “They will have to replace all the cabinets, not just one. It can’t be less than it was before.” But they will not give you replacement cost on the first check. They will pay 80% of that number to account for variations in pricing from different contractors. The remainder will be paid out in supplemental checks if the cost of the repair exceeds the 80%. “But you need to keep really good records,” Mario cautioned. “You can’t pay cash. You need to have checks and written estimates.”

Consider a public adjuster.

For large claims, you may want to consider hiring a public adjuster to serve as the liaison between the insurance company and you. Their job is to make sure that nothing was missed. Mario strongly recommended taking the time to check the references and online complaint forums before hiring an adjuster.

Mario Vargas is a partner at Vargas & Vargas Insurance Agency and has been an insurance representative serving Boston and Stoughton for more than 25 years. Mario is well versed in both personal and commercial insurance and is a certified life underwriter. Mario keeps active in the community through his work with the ESAC board as well as the Massachusetts Affordable Housing Alliance. In his free time Mario enjoys spending time with his wife and daughters.