Damage to rental property by meth exposure

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PostPosted: Tue Jul 03, 2012 10:37 pm   Post subject: Damage to rental property by meth exposure  

Level of toxicity in my insured rental property is above the limit in which my state says is acceptable to human habitation. The damage was done by an invited guest of the leased tenant who was given domicile. The state required legal action to remove the guest from the home. During that time smoking or cooking of meth was done. The tested and validated toxicity indicates that meth may have only been cooked once or used infrequently. It registered a 1.5 on the scale used to rate it. A one would have been light use and acceptable to rent without cleaning.



The cleaning requires a professional fogging of the home and wiping of walls, ceilings, and all exposed furnishings. Someone with a medical condition that can not be exposed to chemicals may not tolerate even after a cleaning without a reaction. The cleaning is done by a licensed certified industrial company who is frequently used by police and sheriffs departments for major cleanups.



A call to the insurance agent and a request for coverage if a claim is submitted was made. The agent called the underwriter to get an opinion. He returned a call to me stating that all we could do was turn in a claim and see what they will do. I believe this is unacceptable in that there is no exclusion in the policy evidently and if so, I would have been told there was no coverage. It was suggested by the testing and cleaning company that it be turned in as a comprehensive claim as it was a willful act of vandalism of the property with a known chemical to be dangerous to humans.



If the claim is allowed, would the insurer be a permitted to subrogate a claim against the lesee or their guest only who has been evicted. The leasee purchased a renters policy two months prior to the damage being done. Will their renters coverage cover their own furniture and clothing for damages?


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PostPosted: Wed Jul 04, 2012 1:00 am   Post subject:   

Quote:
He returned a call to me stating that all we could do was turn in a claim and see what they will do. I believe this is unacceptable in that there is no exclusion in the policy evidently and if so, I would have been told there was no coverage


I don't understand your statement about, turn in a claim and they will let you know if it's covered, and why that is unacceptable. Your agent is not a claims adjuster. You can ask your agent if you'd like but it's not his/her position to determine coverage. If you _know_ its covered then you have nothing to be concerned about, correct? Turn in the claim and have it paid. Or were you asking if it was covered because you _don't_ really know?

Quote:
It was suggested by the testing and cleaning company that it be turned in as a comprehensive claim as it was a willful act of vandalism of the property with a known chemical to be dangerous to humans.


Clearly they don't have a single clue about insurance or coverage. Property policies does contain comprehensive coverage.... auto policies do.



Quote:
If the claim is allowed, would the insurer be a permitted to subrogate a claim against the lesee or their guest only who has been evicted.


You _may_ have a right of action against the person that caused the damage as you could show that he/she knew without a doubt that they were intentionally causing damage to your property.... but I doubt your carrier would pursue it. Usually people who cook meth don't have assets and are a little difficult to locate in order to seek recovery. If I was your carrier I'd probably look at the renter for recovery. That person has a contract which probably states they are responsible for damages they cause to your property. They let that person in and as such, could be responsible for their actions. That really requires a legal opinion as the argument might be, should the renter have known the person was going to cook meth (though, how could the renter now know it was going on).



Quote:
Will their renters coverage cover their own furniture and clothing for damages?


Can't know. Can't read their policy to know if it's excluded or not. Personally, I'd no care about their personal property. If I was your carrier (or you), I'd be filing a claim against the renters renters policy as I'd hold the renter liable for the actions of the person he/she invited into the home.



As far as your policy... some policies do have an exclusion against repairs that are only required due to law or ordinance. However, this really applies to additional repairs needed to bring things up to code. The question really becomes, what physical damage was done to the home. I think you could easily argue that it was damaged by a hazardous chemical. I can't think if any other typical exclusion that might come close but that does not mean there is not one. I think the real issue is that 1) this does not happen every day so the adjuster would need to review the policy and 2) there is the odd question of... is this really "damage".
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PostPosted: Wed Jul 04, 2012 6:14 pm   Post subject:   

The house could also mysteriously be destroyed by fire (perhaps due to spontaneous combustion of all the flammable chemicals that invaded the floors and walls?). That would be covered, without question, unless, of course, arson were involved. You probably wouldn't want to do that.



A plumber's hand-held soldering torch caused over $1,000,000 of damage to a $35,000,000 mansion here in the Los Angeles area just the other day, when it caused a fire in the attic.



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PostPosted: Thu Jul 05, 2012 2:32 am   Post subject:   

What I believe is unacceptable is whether an agent that sells a home owners policy is not familiar with what is covered in the policy that they sell without consulting the claims department. Portions of Missouri and Eastern Kansas are prevalent with meth damaged homes, hotel rooms, and rental properties, if meth damage is not listed as an exclusion and the damage was willful and intentional, I would think it should be covered as an act of vandalism. A quick glance online reveals that often it requires legal action against the insurer to inspire them to pay such a claim.


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PostPosted: Thu Jul 05, 2012 2:36 am   Post subject:   

Quote:
I don't understand your statement about, turn in a claim and they will let you know if it's covered, and why that is unacceptable. Your agent is not a claims adjuster. You can ask your agent if you'd like but it's not his/her position to determine coverage. If you _know_ its covered then you have nothing to be concerned about, correct? Turn in the claim and have it paid. Or were you asking if it was covered because you _don't_ really know?




To be more precise, I asked the agent if the cost to repair the damage was included in my policy. He called the claims department and inquired. He returned my call stating they would not know if it was covered unless a claim was filed. Why is it necessary to actually file a claim simply to find out if you have coverage.

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PostPosted: Thu Jul 05, 2012 2:55 am   Post subject:   

It would seem to me that if there is not an exclusion specific to meth damage to my rental property, that the homeowners (not a dwelling policy) policy should cover the loss.



This information was found online



Quote:
"Named Perils -vs- "Open Perils"



So you can better understand how typical insurance policies work, I am going to explain the difference between a "Named Perils" policy and an "Open Perils" policy. A peril, as referred to in an insurance policy, is a cause of loss, such as fire or theft. Coverage can be provided on an "all perils" basis, or a "named perils" basis. Named Perils policies list exactly what is covered by the policy, while Open Perils (or All Perils) policies will list what is excluded from coverage. Named Perils policies are generally more restrictive. A dwelling policy usually provides coverage for both the dwelling and contents on a named perils basis, while a homeowner's policy usually provides coverage for the dwelling on an all perils basis, and for the contents on a named perils basis.



"Vandalism" - Covered Peril



Vandalism is typically defined as when a person knowingly causes serious physical damage to a structure or its contents. Depending on the type of insurance policy you have on the dwelling, most policies usually cover vandalism. It will either be listed as a named peril or in an open perils policy it won't be listed as exclusion. You will need to read your policy or ask your insurance agent whom you purchased the policy from, if vandalism is covered. If you have coverage for vandalism, and depending on the circumstances involved in the illegal operational lab in the dwelling, your insurance company should pay for all of the pre and post testing, loss rent or use, cleaning costs as well as any necessary repairs following the completion of the decontamination process.



Rental Property and Vandalism



f you are a rental property owner and the tenant or anyone visiting the tenant was the one who without your knowledge had an operational meth lab in the dwelling that caused the damage to the property, I recommend filing a claim with your insurance company for vandalism. Remember the definition of vandalism - when a person knowingly causes physical damage to a structure or its contents. You need to firmly argue this point with the insurance company.



I would not specially list the claim as meth lab, but file the claim under vandalism or malicious mischief (as listed in some polices). The damage caused from the cooking of an illegal meth lab in your rental property has caused serious physical damage to your structure and contents (if it was a furnished apartment) making it uninhabitable.



"Smoke Damage" - covered peril



Smoke from a fire causes a film, soot or odor in the dwelling on the structure of the ceilings, walls and floors and the personal contents which are usually covered by a typical property insurance policy. The hazardous smoke and fumes from a cooking meth lab will leave a similar, although invisible residue in the structure and on the contents rendering them in need of decontamination or replacement as would be covered under smoke damage from a fire.



When our company in Indiana submits an estimate for testing and decontamination to our client's insurance company, I typically list the cause of loss as "vandalism/smoke damage".



Homeowners and Vandalism



When it's not a rental property, it is harder to prove vandalism. When the property owner has no knowledge of either a family member or any other person operating an illegal meth lab on the property, especially if it was being done while the property owner was gone from the dwelling, (such as vacation or extended period of time) this should still be covered under vandalism. It's the knowledge or involvement of the property owner, that determines if the damage is classified as vandalism or not.



Liability Coverage for meth labs



Let's say your policy doesn't have coverage for vandalism or smoke damage under the property coverage of your policy. Remember you also have "Liability Coverage" with your policy. Just because there might not be coverage under one area of your policy such as "Property Coverages" doesn't mean there aren't available coverages in the other areas of your insurance policy. For example: In January, 2010 our company had almost $15,000 stolen from our bank account while doing online banking through "key stroking." While that type of loss was listed as exclusion in our policy, we also had $10,000 stolen cash coverage in another section of our policy that paid us back $10,000 of the $15,000 we had stolen. Just because there's might be an exclusion for coverage in one section of your policy, always consider looking for coverage in the other sections of your policy.

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PostPosted: Thu Jul 05, 2012 3:03 am   Post subject:   

Quote:
A quick glance online reveals that often it requires legal action against the insurer to inspire them to pay such a claim


What you seldom find online is people stating that they simply filed a claim and it was paid. But I can assure you it happens _far_ more often than anything else.



Quote:
What I believe is unacceptable is whether an agent that sells a home owners policy is not familiar with what is covered in the policy that they sell without consulting the claims department.


So you are saying that the agent should have asked the claims dept if meth damage was covered before the policy was sold? That is what you just said.



Do you mean that the agent should ask the claims dept if meth was covered and then answered your questions? This is not how it works. Agent can't/should not adjust claims. The person that delivered my mail can probably read my electric meter. It does not mean I should pay my bill going by what he tells me I used.



[quote]Why is it necessary to actually file a claim simply to find out if you have coverage.[/quote[

because what you think is a simple answer is not that simple. Why was the person in the house? Who found out that the person was cooking meth? Was the person paying rent? Did you rent out the house so the person could cook meth? There are a _lot_ of questions that need to be asked and then the policy needs to be reviewed before coverage is known. Doing all of that is called.... adjusting a claim. A claim cannot be worked until its reported. That is how it works... your policy states you report a claim so that coverage can be determined. I don't see the issue with this process.
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PostPosted: Thu Jul 05, 2012 3:05 am   Post subject:   

Quote:
if there is not an exclusion specific to meth damage to my rental property, that the homeowners (not a dwelling policy) policy should cover the loss.




Most likely.... but there are a _boat load_ of exclusions. That exclusion is not going to say something like, "... meth labs are not covered". It's not that simple.
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PostPosted: Thu Jul 05, 2012 2:21 pm   Post subject:   

Quote:
Why is it necessary to actually file a claim simply to find out if you have coverage.


This should be obvious, but it apparently is not.



When you file a claim, someone (an adjuster, not your agent) comes out to the property to inspect the "supposed" damage. Until then, no one knows exactly what has happened, or how, or why, or where, or when. People tell their insurance agents/companies whatever they "believe" has happened, only to discover that their belief is incorrect.



A person might say, for example, "There was a fire in my house. Your policy says 'fire' is a covered peril. Please send me a check for the damage." If that's all there was to it, checks would be flooding the US Mail. But when the adjuster comes out to inspect the loss, he discovers that the fire was caused by the property owner's arson. That's not covered. (The mortgage lender, as an additional insured, however, could file a claim and collect.)



We take it on good faith that what you post is accurate, but we have no idea. Look at your original post and some of your follow-ons . . . you have written in a level of legalese that we very seldom see here. So you are either an attorney or have experienced something like this before because you "use the words" that an attorney would have used: Level of toxicity in my insured rental property is above the limit in which my state says is acceptable to human habitation (very first statement, with a grammatical error which probably indicates you are not an attorney). Many of the folks who post here have no idea what "human habitation" is, let alone the ability to use it in a sentence.



You ask: "[Is it unacceptable] whether an agent that sells a home owners policy is not familiar with what is covered in the policy that they sell without consulting the claims department". In general terms, I might say, "Yes, it is somewhat unacceptable". But here's a reality, too: Most of the time. especially in property & casualty insurance, the policy is MAILED directly to the consumer, bypassing the agent who does not have a chance to see if any exclusions/endorsements were added to the policy, and he might not get a copy of it for his files. If he does, he probably just files it away without looking at it . . . WHICH IS EXACTLY WHAT ABOUT 90% OF ALL INSUREDS DO, TOO.



Here's the one thing you have never said: "I READ MY POLICY AND KNOW WHAT IT SAYS." How do I know you haven't read your contract? You also wrote: "that there is no exclusion in the policy evidently and if so, I would have been told there was no coverage." And in one of your most recent posts: "This information was found online."



If you have a headache, do you go online to figure out whether the pain is being caused by a brain tumor, a blood clot causing a stroke, or a toothache? (Yes, many people go to their doctor or an emergency room with headaches, only to be told, "You need to see your dentist, because you have an infected tooth.")



What makes you "dangerous" is the fact that you seem to be unwilling to play the game. You have the legalese to support your claim, but you refuse to accept the fact that the insurance company can't tell you if what you believe is the cause of a loss is a covered event until someone actually reviews a claim.



Once again,
Quote:
Why is it necessary to actually file a claim simply to find out if you have coverage.


Maybe a different picture will help.



Think of it in terms of life insurance. Your 10-month old policy pays only when you die. You have your wife call the agent and say, "My husband died, when do I get the money?" The agent says, "Well, I don't know. Let me call the insurance company and see." A few minutes later he calls back and says, "Well, you know what? You have to file a claim and they'll have to check to see if it's covered." Does that sound strange to you?



It does not to me. For a couple of reasons: (1) death by suicide in Missouri is covered after the policy has been in force for 12 months -- the death could have been a suicide, and a full claim would not be paid (premiums only will be refunded), and (2) without "due proof of death" a claim cannot be paid. A death certificate or a letter from the coroner's office indicating that someone has died are the things most insurance companies really want. You don't send them the head of the dead guy. We don't just pay death claims because someone SAYS another person has died.



But notice what I wrote: "You have your wife call the agent and say, . . . ." You aren't dead. The agent doesn't know that, and the insurance company doesn't know that. Until a claim is filed and properly documented, no one can tell you if a claim can be paid.



It's not your game, and it's not your rules. When you buy insurance, you get a copy of the rules to the game, and you have to play by those rules. Agents don't make OR interpret the rules, the insurance companies do. ONLY THE INSURANCE COMPANIES DO, guided by state insurance and contract laws. If they misinterpret the rules, then a judge and/or jury may be asked to read and interpret the rules.



And . . . I think you may have broken the rules.



You have stated that you have a rental property. And then you keep talking about HOMEOWNER'S INSURANCE. Most rental properties are NOT covered by a homeowner's policy because there are likely to be significant exclusions for dwellings which are rented to others, so what good would a policy like that do for you?



And if that IS the type of policy you have, it most definitely needs to be evaluated by an adjuster first. Your agent is worthless in this regard. Even if he did read the policy before he sold it to you -- because he sold you the wrong policy. Did you disclose that the property was intended to be rented to others?



Quote:
It would seem to me that if there is not an exclusion specific to meth damage to my rental property, that the homeowners (not a dwelling policy) policy should cover the loss.




Again, I ask, have you read YOUR policy? If you have a homeowner's policy, you may very well be in big trouble. You may not have the kind of "insurable interest" required by a homeowner's policy to cover your loss as a landlord.



You generally need a DWELLING POLICY form to cover the use of the property by tenants (and their guests). Those forms come in three "flavors", and the one most favorable is known as "ALL-RISK" or "OPEN-PERIL" coverage. But this is not as simple as it sounds.



While an ALL-RISK policy covers every possible cause of loss, IT SPECIFICALLY DOES NOT COVER EXCLUDED PERILS. That's the page (or several pages) of the contract that are most important to read -- to see what is not covered among all the possibilities.



An adjuster must come to the property, examine the nature of the loss, possibly order third-party inspections/testing of the property, write a report for the claims department, and THEN the claims examiner will compare the report to the policy to see if the claim is payable or not.



As tcope has said, the vast majority of claims are paid once all the ducks are lined up in a row. You want the agent to obligate the company to pay a claim, and that just isn't going to happen.



Quote:
To be more precise, I asked the agent




Your first mistake, like most insureds, was calling the agent about your claim. That only delays the process. Agents are not adjusters and they are not claims examiners. Although we, as agents, want to be helpful to our clients, and especially so in property & casualty insurance, putting ourselves between the insured and the insurance company in a claim situation causes more trouble than it prevents, because information is being passed back and forth through the agent and communication gets screwed up.



I learned my lesson about this some 35 years ago . . . before I came into this industry . . . when I called my agent to file a claim. He says, "Oh, sure, that's covered." And the claims department had a different opinion. When I filed a complaint with the CA Dept of Insurance, the claims department had a change of heart. But by involving the agent, it delayed the whole process significantly.



I've had only a handful, literally, of claims in all the years since 1977, and each of the other four were filed directly with the insurance company, and all four of them were paid without incident. Not once did I even call an agent for a phone number to the insurance company -- because it's right there in the policy.



Speaking directly with the claims department is always the best course of action. It doesn't mean everything will go smoothly 100% of the time. But it generally makes things happen more quickly. And most of the time the outcome is the one that the insured wanted.


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PostPosted: Thu Jul 05, 2012 3:57 pm   Post subject:   

I think this is a good example:



"A person might say, for example, "There was a fire in my house. Your policy says 'fire' is a covered peril. Please send me a check for the damage." If that's all there was to it, checks would be flooding the US Mail. But when the adjuster comes out to inspect the loss, he discovers that the fire was caused by the property owner's arson. That's not covered. (The mortgage lender, as an additional insured, however, could file a claim and collect.) "



There is _much_ more to a claim then just telling someone is covered or not. You may think meth damage is an every day occurence but in 20 some years I think I've only only 1 claim like that. If your agent tells you its covered... without really knowing any of the facts, and your insursnce company denies your claim you then have a bad faith claim against your agent and he/she may need to pay for all of your loss out of his/her pocket (really Errors/Immisions insurance).



As mentioned, filing a claim means that the insurance company does a complete investigation, reviews the policy, perhaps reviews the application to find out why you have a home owners policy on a property that is rented out (perhaps your policy has a limit or exclusion for portions of the home renter to other parties), etc.



Call em jaded but insurance companies don't like to write home owners policies on homes that the owner rents to someone, who then rents to someone else and the home is then used as a meth lab. It's probable that your carrier won't renew your policy (another reason they want it reported as a claim).


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PostPosted: Thu Jul 12, 2012 2:19 pm   Post subject: Personal  

experience handling a claim of this nature indicates it to be covered. The carrier had a named peril policy and checked through FC&S bulletins and found no exclsuion. A friend also had one of these claims which was deemed to be covered. However, each case is subject to the specific policy in place at the time of loss.


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PostPosted: Thu Jul 12, 2012 5:34 pm   Post subject:   

Quote:
each case is subject to the specific policy in place at the time of loss.


This is the reason I specifically asked if the poster had READ HIS POLICY. We can conjecture all day long as to what is or is not covered, what we have seen covered in our past experiences, and none of it means anything without a reading of the actual contract in force at the time of the loss.



You'll also notice, the OP has never returned to the discussion.


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