Last Year’s Most Painful Insurance Losses

THE LOSS: Washington state had a long, unseasonable cold snap and a water pipe froze in the attic of a lovely home on the market. The remodel had recently been completed and it was all ready to meet its new owner. Once the temperatures dropped, the unin- sulated pipe burst, causing a large amount of damage to the kitchen and all throughout the house. Drywall and insulation covered just about everything including the furniture being used to stage


N otice some unusual punctuation or capitalization in this article and others written by our contribut- ing insurance experts? These anomalies are not typos. They are deliberate decisions on the part of the authors to help ensure that you, the investor, are speaking and writing the same “language” as your insurance com- pany representatives, adjusters, and other profession- als. “We capitalize intentionally to indicate types of coverage, exclusions, or policy formats,” said BreAnn Stephenson, assistant vice president of Affinity Loss Prevention Services (ALPS). “It may seem a little odd, but it is helpful in differentiating between technical coverage terminology and actual physical damage.” For example, if you see “Water Damage,” capitalized, then the term refers to coverage for water damage. Without the capital letters, you are discussing the actual water damage to the property. In some cases, the two things may be related but not nearly the same. was just under $2,000. In this case the insurance coverage respond- ed appropriately and as expected, but the investor would still have to cover the cost of almost $8,000 to replace the stripped electrical. LESSON: This theft could have been prevented by several proactive steps. 1. The owner could have invested in an inexpensive, yet effec- tive door reinforcement system. By spending under $100, they might have avoided their $8,000 loss. 2. Be sure your property is well lit. Motion detector lights are a smart choice for any property as they may scare off an intruder who was expecting to work unseen in the dark. 3. Consider installing an alarm system. Portable alarms often work well for investors as they are cellular-based, have a battery-back up and a built-in motion sensor and 95dB siren. (Hint: It’s loud!) Security works best when there are several layers.


by BreAnn Stephenson


The licensed plumber they called in advised that a previous tech must have poured cement down the drain line.

hough 2016 is now water under the bridge, it’s not too late to learn a few important lessons to make 2017 your best year yet. Sadly, many of the losses we see each day can be prevented with a little planning or on-going maintenance. However, all hope is not lost. Often our greatest blunders be- come fuel for even bigger successes. We’d like to share a small sampling of some of 2016’s unfortunate, all-too-common and severe losses, so you don’t have to repeat them. Heartbreak can become a thing of the past for your investing life – or – never become a part of it!

the house. A messy cleanup involved a shop vac to remove water, a dehumidifier to remove moisture from the air, and

INSURANCE INSIGHT: The owner of the property ended up bearing the full cost of the loss because sewer/ drain back-up was excluded from their policy. In fact, many do not know that sewer/drain back-up is a standard exclusion in many property policies. In addition, if the prior technician were able to be found, the proper place to file a claim would be against his General Liability policy as he was responsible for the damage.

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BreAnn Stephenson is assistant vice president of Affinity Loss Prevention Services. Contact her at




LESSON: Always make sure any contractors you hire, whether it be plumbing or electrical or otherwise, are both properly licensed and insured for the specific type of work they will be doing for you. An additional tip? Once you have confirmed coverage by calling the agent listed on their Certificate of Liability, request that they add you as an Additional Insured on the policy. This will help ensure that you are notified in the event the coverage lapses or is cancelled.

THE LOSS: It was a rainy day in Michigan and the basement got more than just a little damp. As a result 30 pairs of high heels (kind of fancy ones at that!) and all of the children’s fall and winter clothes were ruined by mold.

Visit for more tips to protect your assets and discounts to boost your bottom line from providers including:

INSURANCE INSIGHT: Mold, mildew and fungus are often ex- cluded from standard insurance policies. In addition, a tenant’s belongings are not going to be covered under the policy that covers your property. LESSON: Requiring your tenants to get Renters Insurance is beneficial to you and especially them.


• Property Manager Listing • Maintenance Checklists • Best Practices

COST OF THE DAMAGE: $9,980 THE LOSS: On a not-so-cold day in Georgia, a thief busted his way past a deadbolt of a vacant property and took anything relating to the electrical system. INSURANCE INSIGHT: Though the investor had coverage for Theft, after the deductible and applicable de- preciation were subtracted, the settlement

A MAJOR STOPPAGE IN THE PLUMBING 816.398.4114 Learn more at:

COST OF THE DAMAGE: $7,500 THE LOSS: A Texas landlord gets a call from his tenant advis- ing of a major stoppage in the plumbing. What did they find?



104 | think realty magazine july :: august 2017

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