May: Underinsurance

Coverage Gaps & Underinsurance


A Restoration Company’s Observation?  Many Policyholders Are Underinsured or Have No Coverage!

Here’s a statistic that may shock you:  About 60% of all homes in the U.S. are underinsured—by an average of 20%—according to a report from housing data firm CoreLogic.  This is no surprise to Lindstrom Restoration.  We routinely see homeowners that are either underinsured or have no coverage for their loss.

OK, let’s be clear.  Our employees aren’t insurance agents or adjusters.  We are not qualified or licensed to provide insurance advice.  We just report what we observe from insurance losses, and sometimes that’s very depressing.  Our conclusion?  Many policyholders are either making VERY risky decisions on their coverage or are not properly informed by their agents. 

We encountered one young couple that spent $25,000 refinishing their basement.  Then a huge rainstorm hit, and their sump pump failed.  Upon returning from their vacation, they discovered several inches of water in their basement. Sadly, the couple turned down the coverage from their agent months before and were shocked later to see that they were now out of pocket to do the mitigation and repairs.  They attempted to blame the agent for not telling them, but fortunately, everything was well documented by the agency.   

In another loss, a homeowner had significant hail damage.  The insurer agreed to replace the roof and damaged siding, but the resulting replacement siding and roofing did not match the existing colors.  The policyholder was angered to find out that a few months prior he decided not to buy the “matching endorsement” that the agent offered.  As most insurance folks know, many carriers offer roofing and siding undamaged materials coverage as an optional endorsement. What is a matching endorsement?  We checked with an insurance professional we know and his explanation was, this means is if you have a partial loss, and your siding or shingles are no longer made, and the materials can’t be matched, the insurer will cover the cost to replace your entire roof and/or your siding.

Then there was the homeowner who lived in a flood plain.  They were sickened to discover that the flood insurance quote their agent offered a few months back was still sitting on their desk and hadn’t been acted on.  According to the Princeton Survey Research Associates International, 56% of policyholders incorrectly think flood is covered on their standard property coverage. 

As discussed at the beginning of this article, we often discover that the insured is underinsured. The agent or adjuster is not informed about the $75,000 addition their client did on their house.  Once we have found out just how much coverage the insured has on the repairs, the resulting gap forces us to collect out-of-pocket from the homeowner if they want to complete the work.  This can be a nightmare if the homeowner doesn’t have the funds to do the whole job.  We sometimes must walk away from a partially completed project when the homeowner cannot or will not pay.

In other instances, such as sewer back-up and sump pump failure coverage, the insured bought the coverage, but the amount allowed was inadequate for the loss incurred.  An agent can help you determine what an appropriate coverage amount is and what that cost is for your lower level.  Obviously, affordability is an issue for many homeowners.  Also, some carriers may limit the amount you can purchase.  At Lindstrom, we can’t make coverage recommendations or critique policies.  We CAN tell you that sometimes homeowners either don’t have the coverage or it is inadequate for replacement cost for like kind and quality. 

Many people now live in townhouses and condominium multi-family developments.  The issue here is how the master association policy interacts with the homeowner’s HO-6 coverage.  Lindstrom has seen instances where policyholders and even associations have been underinsured.  In these instances, it really helps to have a contractor, who has a lot of experience working with associations and individual homeowners with HO-6 policies.  Of course, it’s also important to have an agent who understands how to properly write associations.

We don’t have to tell you how much building materials have gone up.  We, restoration contractors, worry if home and business owners are insured to value.  Expert Agent Bob Loonan, who we have partnered with on many CE classes, provides this advice for insurance professionals: “Annual reviews are essential to ensure that structure and property are adequately insured to value.  Our job, both professionally and ethically, is to offer clients proper protection for all their risks.  Agents should ensure that policyholders make well-informed decisions.  They should be made aware of applicable endorsements and then if people refuse them, the applicants need to be warned of the possible consequences. These communications should then be documented, dated, and saved.” 

We didn’t touch on liability coverage. That’s a whole other subject for another day and well beyond our paygrade. Suffice it to say that we restoration contractors sometimes get caught up in the mess and end up waiting on the sidelines while the litigation plays itself out.  One thing’s for sure. Lindstrom sees the value of an experienced and knowledgeable agent who can not only write professional coverage for any number of insurance needs but update that coverage annually to keep it aligned with increasing costs and values.  

We have all witnessed the skyrocketing costs of such items as lumber, steel, and other commodities due to pandemic-driven supply line issues.  The war in Ukraine has driven up fuel prices and inflation is currently higher than it’s been in 40 years.  All these factors affect replacement costs and repairs.  It benefits everyone to keep a watchful eye on the external environment and the longtime tried and true principle of insuring value.    

April: DIY

Some things are better left to the pros

‘Do It Yourselfers’ have been in full gear since the pandemic has hit. Tackling projects like painting your home, updating old lighting fixtures, and changing up your landscaping are all achievable DIY projects that will save homeowners a lot of money by doing it themselves. However, when it comes to drying and
eradicating water from your basement after a flooding incident, it is better to let the pros handle it.

April showers bring May flowers and flooded basements. Water, although it may look harmless, can carry several pathogens and contaminants. Depending on the source of water intrusion into your home, and how long it has been there, water is categorized differently and each category requires a different approach.

If you decide to DIY your basement mitigation, it can lead to many problems down the road and cause future health problems for you and your family. Oftentimes in the event of a homeowner drying their own home, we see an issue with severe mold growth, structural damage, and rot.

In addition, water damage must be disclosed when a home is sold, and the failure to have a professional mitigate the damage may result in a significant decrease in the home value.

Professionals, like the ones here at Lindstrom, are trained and skilled in dealing with flooding problems both large and small. Save yourself time, worry, and your future health, and allow the professionals to handle this project!

Equipment Considerations:

  • Common Fan Vs. Industrial Air Mover
    Airflow is 200 Vs. 2000 Cubic feet per minute (CPM)
  • Home Dehumidifier Vs. Commercial Dehumidifier
    60 Vs. 200 Pints of water removed per day

March: Spring

Ready or not, here she comes!

After a cold and long winter, the first day of spring, March 20th, is long-awaited by most of Minnesota’s
residents. With the longer days and chirping birds, the rising temperatures of spring start to melt our
seasonal white groundcover creating an excess of water. There are a few things that a homeowner should do to prepare their homes for the transition between spring and winter and prep for the wet months ahead:

1) Inspect your sump pump: A sump pump collects excess groundwater and keeps it from entering your basement, gets rid of standing water along the foundation, and prevents basement dampness.
Spring is a great time to inspect your pump to make sure it is free of debris, the pump is running
smoothly, and ensure the float and discharge pipe are free. Visit https://www.ppspr.com/products/heat-exchangers/ to buy the best parts to fix up the plumbing issues.
of mud, rodent nests, and rocks. Installing a battery backup on your sump pump in case of power failure due to a storm is also highly recommended.

2) Egress windows: Make sure that the window wells for your egress windows are debris-free and the drainage pipe out to your drain tile is not obstructed. Also, place a cover over the window well to ensure that additional rainwater doesn’t get in.

3) Ground slope: Ensuring that your ground slopes away from your foundation is detrimental to shedding that excess water in the spring.

Things to Consider:

  • The melting snow isn’t the only cause of an influx of water. Spring storms can drop several inches of precipitation in a matter of hours.
  • Standing water in your home needs to be dried immediately. If water is allowed to sit for more than 72 hours, advanced water damage (i.e. mold) is possible.

February: Ice Dams

How To Prevent Ice Dam Damage

Living in a state like Minnesota ensures that we see our fair share of snow for at least part of the year. Whether you are a fan of the winter season or not, snow can really wreak havoc on our homes, specifically our roofs. Continue reading

October: Fire Safety Month

Fire Safety Precautions For Your Twin Cities Home

Fire safety is often at the back of our minds, until the unthinkable happens. Although we hope a fire never devastates your property, it is important to take the proper steps to ensure your family is safe in the case that anything should happen. Continue reading