No flood-insurance coverage? Don’t be so sure

Despite what you may have been told, there may be insurance coverage available for the damage your property experienced from the recent rains that have devastated many parts of Colorado over the past weeks.

Many believe that if you do not have flood insurance you cannot recover from your insurance company. Some already may have been told in writing or over the phone that their insurance companies are denying them coverage for water-related damage. In Colorado, for many people and businesses, this simply should not be the case.

The truth is that each loss or claim is different and must be examined carefully and independently. Coverage depends on your policy and the facts surrounding how and why water entered your property.

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It is true that many policies contain language that purports to exclude coverage for water damage or flooding. However, what constitutes water damage or flooding may depend on how the policy is specifically worded. Each policy must be carefully read and compared with the specific origin or path that the water took onto the covered property.

Insurance companies, especially in instances of mass claims, frequently do not have the time, capability or motivation to accurately make the fact specific determinations required for fair claims decisions. Sometimes, the company denial is wrong.

In one case, for example, the Colorado Supreme Court struck down an insurance company’s denial where a property experienced significant water damage from a heavy spring runoff. In that case, the insurance company denied coverage based on a clause that excluded coverage for “water damage” that resulted from “surface water.” The court determined that the spring runoff entered the property because the natural path of water was diverted because of manmade trenches. As a result, the court decided that the water damage did not fit the policy exclusion and awarded coverage to the policyholder.

Insurance denials can also frequently result from a misunderstanding or miscommunication as to the cause or source of the water damage. When reporting a water loss to an insurance company among hundreds of other claims, it is easy for the insurance company to assume that your damage is directly related to the floodwaters. But, water damage may be the result of a covered event such as the failure of plumbing components, such as sump pumps, drains or gutters.

Many policies cover this type of damage. So, it is imperative to either accurately report these facts to your carrier or, at the very least, inform the insurance company that you do not know the cause or source of the water and reserve your right to provide additional information as it becomes known. Frequently, experts are required to evaluate the damage and determine the actual source or sources of water intrusion.

Far too often, policy holders are too quick to report flood damage, not knowing that the insurance company may deny coverage before a full investigation can be completed.

Even if it is ultimately determined that there is no coverage under your own policy and the insurance company has properly denied coverage, there may be other sources of financial recovery. Water intrusion may be attributable to third parties such as adjacent property owners if their failure to maintain their property caused the water to flow onto your property. Sometimes, water damage can be the result of improper construction methods, which could implicate liability for the property builder or developer.

In instances of commercial or rental properties, the landlord may bear some responsibility for the damage experienced by its tenants and vice versa. Many people may find some monetary compensation from the Federal Emergency Management Agency, the state of Colorado, nonprofit groups or charities. It is important to explore all of the potential areas of recovery so that the rebuilding may begin.

With the enormous scope of damage that our communities have experienced and the daunting tasks ahead, it is vital to know that you are not alone. Calling on a third party such as an attorney, engineer, or an uninterested insurance professional can be an important step to determining your rights and the best first step to recovery.

George V. Berg Jr. is managing and founding partner of the Berg Hill Greenleaf & Ruscitti LLP law firm in Boulder. He may be reached at 303-402-1600.