There's Water in the Basement. Now What?

The phone rings Monday morning.
“We've got water in the basement. Are we covered?”
The word water tempts people into quick answers.
Don't.
Water can arrive in very different ways.

• A broken pipe.
• An overflowing appliance.
• Water entering from outside.
• A drain or sewer backup.
• A sump problem.
• Groundwater.
• Foundation seepage.
• Storm conditions.

Or something else entirely.
The facts matter.
And the applicable policy language and endorsements matter.

STOP. ASK ANOTHER QUESTION.
The first question shouldn't be:
“Are you covered?”
And it shouldn't automatically be:
“That's flood.”
Instead, start with:
“Tell me what happened and where you believe the water came from.”
Notice what that question does not do.

• It doesn't promise coverage.
• It doesn't deny coverage.
• It doesn't force the customer's situation into a category before the facts are known.

It opens the conversation.

Why the Source of the Water Matters.
Two customers can both say:
“There's water in my basement.”
and be describing very different situations.

• One may be describing water from a failed plumbing line.
• Another may be describing water entering from outside.
• Another may have a drain or sewer backup.
• Another may have water associated with a sump problem.
• Another may be describing seepage or another condition.

The producer doesn't need to determine the claim from the customer's first sentence.
The producer needs to discover what actually happened and take the appropriate next step.

Work the Five Disciplines

HEAR: A loss may have occurred.
But the source and cause of the water are not yet clear.
That's important.
The producer should recognize that “water damage” is a description—not necessarily a coverage determination.


ASK: Slow the conversation down.
Ask:

• When was the water discovered?
• Where did it appear?
• What was happening when it occurred?
• Was there a broken pipe?
• Was there an appliance involved?
• Was there a drain or sewer problem?
• Was the sump involved?
• Did water enter from outside?
• Were there storm conditions?
• What property was damaged?
• Is the water still entering the property?
• Has anyone already taken steps to stop or limit the damage?

You're not trying to conduct the carrier's investigation.
You're trying to understand enough to take the next appropriate action.


VERIFY

• Follow the policy and the carrier's claim-reporting procedures.
• Review applicable endorsements when appropriate.
• But don't replace the claims process with an agency-desk decision.

A producer can help the customer understand the process without declaring:
“Your claim is covered.”
or:
“Your claim isn't covered.”
before the appropriate review has occurred.


DOCUMENT: Record the customer's description in the customer's own terms.
Document:

• When the loss was discovered
• What the customer said happened
• Where the water appeared
• The suspected source, if the customer identified one
• What questions were asked
• Instructions provided
• Claim-reporting information
• Any referral made
• The next action

Be careful about writing a conclusion that the customer never made.
There's a difference between:
“Customer reports water entering basement during heavy rain.”
and:
“Flood claim.”
The first records what the customer told you.
The second may be a conclusion that has not yet been established.


NEXT SAFE ACTION: Help the insured report the loss promptly when appropriate and let the carrier investigate and determine coverage under the policy and facts.
If the customer needs immediate guidance about protecting property from further damage, follow the carrier's applicable instructions and appropriate loss-mitigation procedures.
Don't guess. Don't promise. Don't delay the appropriate next step.

The Producer's Job Isn't to Become the Claims Adjuster. This is an important distinction.

• A good producer should understand coverage.
• A good producer should be able to explain insurance concepts.
• A good producer should recognize when a customer's description raises an important coverage question.
• But the producer doesn't need to turn every phone call into a claims investigation.
• Nor should the producer make a coverage determination simply because the customer wants an immediate answer.

The professional response is often:
“Let's make sure I understand what happened.”
Then:
“Let's get the loss reported properly.”
Then:
“The carrier can evaluate the claim under the policy and the circumstances.”
That's helping the customer.
And it's staying within the proper role.

Here's the Bigger Lesson. 
This isn't really a story about basements.
It's about labels.
Customers use everyday language.
Insurance professionals work with policy language.
A customer says:
“My basement flooded.”
That statement tells you something.
But it may not tell you everything you need to know.
The producer's job is to discover the facts before attaching an insurance label to the situation.
That's a valuable habit far beyond water losses.

Eddie's Takeaway: When a customer says:
“There's water in my basement. Am I covered?”
Don't rush to answer.
Start with:
“Tell me what happened.”
Then listen.

• Ask another question.
• Verify what needs to be verified.
• Document what the customer actually told you.
• And take the next safe action.

That's a coverage conversation.

TAKE THIS TO YOUR NEXT AGENCY MEETING. 
Ask your producers:
When you hear “water damage,” what is the first question you should ask?
The answer I'm looking for is:
“Tell me what happened and where you believe the water came from.”
Then give them these three statements:
“My basement flooded.”
“Water came through the basement wall.”
“A pipe broke in the basement.”
Ask:
Are those three statements telling you the same thing?
Then ask:
What additional questions would you ask before deciding what happens next?
That's a five-minute exercise that can teach more than a page of memorized coverage definitions.

Want to Know More? 
Water-related losses can involve several different insurance questions, and producers need to understand the differences before they can have a useful coverage conversation.
For a deeper producer-oriented discussion of flood exposures and flood insurance, explore the FYI Express+ How to Insure Flood Insurance guide.
​
LEARN MORE →

↑ BACK TO OCTOBER CONTENTS