What to do if we had a clogged pipe that resulted in water damage but our insurer will not cover all of it?

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What to do if we had a clogged pipe that resulted in water damage but our insurer will not cover all of it?

Our insurer is refusing to fix all the damage, except for a small closet and flooring in a bathroom. We have water damage in 2 bedrooms,bathroom and kitchen. Mold has now started growing. While we have mold coverage, they have told us that they aren’t going to take care of any of it. A few years ago we had damage to our siding and since they no longer made the siding we had our insurer gave us 2 boxes of a different color siding and said that’s all they were going to do, case closed. We couldn’t afford to replace all the siding so now we have 2 different colored sidings on our home.What can we do when dealing with a big company with lots of lawyers?

Asked on August 31, 2013 under Real Estate Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

You can sue them. An insurance policy is a contract; while an insurer does not need to pay any amounts or for any damage not covered by the terms of the policy, it *does* need to pay whatever and whenever the policy calls for. If the insurer does not pay what it is supposed to pay under the policy, it is in breach of contract and you could sue to enforce the terms of--and get the payment due to you under--the policy. Insurers, like all parties to a contract, also have a duty to deal with other parties in good faith, and if the insurer is not doing that, it may be violating the "implied covenant of good faith and fair dealing," and you may sue for that violation, too.

If the amount you are looking for is less than the maximum limit on your state's small claims courts, you are probably best off representing yourself pro se and suing in small claims; if the amount is greater than that, consult with a lawyer.

Yes, they have lawyers, but big companies do lose when the facts are against them; and also, lawyers and defending against a lawsuit cost money. Say that you sue them for $12,000. Even if they feel they have a solid case, there's a chance they will lose--there always is--and they know that. Say they think there's a 25% chance they'd lose; statistically, a 25% chance of losing $12k is equal to $3k. Say that they also think that if they have to go to court, they may spend another $3k on lawyers--that's now $6k total. They may well be willing to offer you something less than $6k--maybe $3k to $5k--as a settlement. That's not what you were suing for, but it would still be better than nothing.


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