What to do if our insurer is denying a claim where a faulty water ruined all of our downstairs flooring?

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What to do if our insurer is denying a claim where a faulty water ruined all of our downstairs flooring?

About 5 years ago, we did a major remodeling of our home. One of the things we did was removed all the carpeting and replaced it with hard wood floors. As a precaution I replaced the vapor barrier under the house and placed an electric ventilation system with humidity sensors. All was well until recently. Unknown to us, around February estimated the pressure valve on one of our water heaters opened and it was plumbed so the water was routed under out home. We started noticing some issues about 4 weeks ago and when I investigated I discovered about 6′ of water in our crawl space. After pumping it out I found the source was the water heater. Over the last few weeks our floors have warped, cupped and in a few places the floor has literally popped up. I contacted my insurance company and they sent a restoration company out. The estimate to fix everything is 25K. My insurer has informed me that since the water went under the house and not directly on the floor I’m not covered even though the source of the water was the water heater. The vapor barrier did such a good job it kept the water in a pool under my house since the water was coming from above and not from the ground. The insurance company is saying it’s still considered ground water since it didn’t go directly to the floor. They told me that had the water heater put the water directly on the floor I would be covered. This doesn’t seem right to me and I’m interested if I have any legal recourse.

Asked on May 14, 2019 under Insurance Law, Alabama

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

First, read your policy yourself: an insurance policy is a contract, and like any other contract, to the extent that its terms are clear and unambiguous, it is enforced directly in line with those terms. If when you read the policy, it seems to unambiguously support the insurance company's position, then you dont' have recourse: if even you agree, on reading the policy closely, that the insurer is right, it's almost certain a court (if you were sue the insurer) would side with insurer.
On the other hand, if you believe that the insurance company's interpretation is wrong and that they should have paid your claim (as you appear to believe), you could sue the insurer for "breach of contract"--for violating their contractual obligation(s). If the court agrees with you that under these circumstances, as applied to the terms of the policy, the insurer should have paid, the court will order them to pay the claim.


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