You're Most Likely Underinsured
The Man Family Cave
I was supposed to have the project done before my son was born, but before I knew it, there he was at 2 years old, climbing through the cabinets I was about to install as part of my basement remodel. It turns out that when you do it yourself, it takes a little longer! When I finally completed it, my family had a re-vamped basement that we could use for entertaining, playing or just connecting while watching a movie together. I was proud of my work and began to add up all the money I saved by doing it myself. Then I thought about the money I spent just on materials like carpet, drywall, paint, cabinets and tile not to mention the furniture and my son’s toys.
Being a SERVPRO owner, I know that the most common damage in basements is water damage. There are all kinds of sources like broken pipes, water heaters, washing machines, water softener tanks and of course anything that happens upstairs will eventually find its way down to the basement. But I felt really good knowing that if any of those things happened in my revamped basement my insurance would kick in and I could have someone else repair it!
Not So Fast!
Our customer was a young traveling sales rep and was gone from her home for several days at a time. This particular time, she had returned to find that the basement she just recently spent thousands of dollars to have finished sustained a water damage. There was a drain in the laundry area that backed up after a heavy rain and it was estimated that only about an inch or two of water got into the basement, but it made its way all over. By the time she returned home to find her wet basement and called us out, the water had already wicked up the walls about 14 inches!
No worries though! Insurance was there to cover the loss and everything was returned to preloss condition with little-to-no financial harm to the customer, right? I wish I could say that was the case. However, our customer discovered that this source of loss was only covered by a special coverage attached to a homeowner’s policy. Good news – she had that coverage. Bad news – there was limit of only $5000!!! For this job we had to cut out drywall 2ft from the floor, tear out carpet, remove baseboards, steam clean, apply a sanitizer and install drying equipment just to get the basement clean and dry. There was also a small bar that had to be removed and 4 rooms of furniture that sustained water damage plus the cost of repairing everything that had to be removed. I’m sure you can see that $5000 left our customer woefully underinsured.
The next day I began to think about my own basement and a particular drain right in front of the washing machine. I knew that I had drain back-up coverage, but I never really looked at my policy in detail to see how much. My basement wouldn’t be nearly as expensive to repair as our recent customer's if the same thing happened, but I also knew that it would take more than $5000. The next day I called my agent and found out that that I did indeed only have $5000 of coverage, so I asked to increase it. At that time, for an extra $50/year I could increase my coverage by $20,000 with my carrier. What a bargain!
All Things In Moderation
I’m not saying to run out and buy a bunch of insurance for drain back up if you don’t need it. I’m not saying go buy $50,000 or $100,000 of drain back up coverage if you do need some. However, I highly recommend taking a quick inventory of what you have in your basement and maybe do some online shopping to see what it might cost to replace those items if they were damaged by either rain water or sewage backing up from a sump pump or drain. Think about the materials that were used to finish your basement. Tile can withstand water damage especially when installed on concrete. Carpet may survive a sump pump or water heater failure, but it has to be disposed of if the water originated from a sewer drain. Cabinets may survive a sump pump failure, but not if the water sits long enough to cause warping. My advice is to work with your insurance agent to determine the right coverage for you and your situation. If you need this special coverage, you will be happy you have it if you sustain this kind of loss. If you need higher limits because you have more to lose it will cost a little more, but you will be relieved that you have it if you ever need it. Make sure you review your policy or call your agent today before it’s too late.
The last thing you want is to find out it’s going to cost more than you have to put your home back “Like it never even happened.™”