Sewer Backups Have Expensive Hidden Costs

Charley“Sewer back up can cause extensive damage and coverage amounts may not be adequate.  Does your policy afford the proper coverage with sufficient limits?  This article may trigger questions as you review your policy for this vital coverage.”
Charley Staab, CIC

Article posted on: MultiUnitLiving.com

Heavy rains frequently overfill municipal sewage systems and can result in backups into local buildings—even when there’s no declaration of a flood. A mixture of raw sewage and fresh water can be forced backwards through the system into apartments via bathtubs, toilets and sinks. That water can affect not only units, but also common areas such as hallways.

In Connecticut this July, the local news station called the scene in some apartments “stomach churning.” It’s not just the standing water that is sickening, either. Even after the water recedes, there is very unpleasant debris left behind. Furniture and flooring are typically ruined, and walls and personal belongings may have been contaminated. If it gets into electrical units, a building owner will have even more expensive issues to deal with.

The water that comes in from a drain backup is not only nasty, it is usually full of bacteria that can cause skin and other infections. If affected units and common areas are not cleaned properly, bacteria can remain and mold can form. These are all things that can lead to claims against a building’s owner or property manager. While residents and property managers might be inclined to go in and immediately start cleaning up or removing damaged items, it is usually best to get a professional service crew to do the restoration. They specialize in hazardous sites and can keep occupants, owners, and managers from getting sick from handling contaminated materials.

Who Is Responsible?  

It’s true that residents should carry their own insurance to guard against damage to personally owned property due to sewer and drain backup, but so should building owners. It may be the case that a backup is found to be the result of improper building maintenance or design, in which case the owner or manager could be held liable for damages or injuries, such as illness.

Causes of backups include landscaping that damages or blocks exterior pipes, heavy rains or flooding, and lack of maintenance. Sometimes there are signs that building drainpipes are in bad shape. Bad odors coming from drains and slow drainage are two of them. As soon as any signs of poor drainage are noticed, management should take action to prevent costly backups.

Keep in mind that cleanup isn’t the only expense. Residents need to be housed elsewhere while their units are uninhabitable, and the complex might also have to replace damaged personal belongings as well as building materials, such as carpeting, cabinets and wallboard.

If an apartment building or condo association insurance policy doesn’t contain sewer and drain backup coverage, that insurance can usually be added by endorsement. A commercial flood insurance policy is a very important protection to consider, as well, since backups caused by flood would not be covered under most standard commercial property policies. A flood policy may cover damages caused by sewer backups that result directly from flooding. A flood policy won’t, however, pay for business interruption or certain similar losses caused by flood. Your insurance agent can advise you about how to add coverage for the temporary housing of affected residents and the replacement of their belongings for which an owner  or property manager could be held liable.  You can always decide not to acquire these coverages, but it is very important you first understand the risks, the ways you can mitigate them and the costs of protecting your properties and potential liabilities.

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