Cold temperatures, winter weather wreak havoc for insurance

In many parts of the Upper Midwest, temperatures in recent weeks have repeatedly dipped and held below zero. Some areas in the region even saw their own temps hit lows not seen in Antarctica on the same day. That's dangerously cold, for humans and buildings alike, and can end up causing a lot of damage that could lead to home insurance claims.

Whether those claims will be for damage that is actually covered by a home insurance policy can vary widely, but this is an issue that's likely to rear its head time and again in the coming weeks and months for many home insurers.

Unexpected water damage
Probably the most common damage caused by frigid temperatures may come in the form of frozen pipes that leak or spray water into a home, according to Kirksville, Missouri, television station KTVO. There are many conditions that may apply in these cases, but in general, a home insurance policy is going to have the cost of water damage from burst pipes covered for owners. That may change, however, if it's not a primary residence and the heat wasn't on.

“If you're trying to maintain the heat in your house and it just gets too cold and it bursts, then that's covered,” Lori Mason, owner of a local insurance agency, told the station. “If it's a vacant home and you're not keeping heat going most insurance companies won't pay for that.”

It's also worth noting that in a lot of cases, home insurance won't pay to cover the cost of repairing the burst pipes themselves, only the damage that they cause, the report said. As a consequence, it's wise for people to make sure their pipes – especially those that run in walls that abut the outside of the house – are properly winterized to help reduce the risk of a burst in the first place. Of course, when outside temperatures are 20, 30 or even 50 degrees below zero, that's not always easy for even the most attentive homeowner.

Frozen pipes can do major damage to a home.

Cold damage
Meanwhile, when temperatures are as frigid as they have been in the Upper Midwest, it's also possible for other types of damage to crop up, according to the Insurance Information Institute. Hard winds can blow over frozen trees or bring down branches that are already covered in snow and ice, which can damage homes, other structures on the property like sheds or automobiles, and even cause injury to people.

Likewise, if an attic or roof isn't properly insulated, it can lead to snow and ice on the roof melting and running down to the sides of the house itself, the report said. Whether caught by gutters or simply left to form puddles wherever it lands, that can create a major hazard for homes. For instance, if gutters are clogged, the backup can lead to ice dams which do major damage, or build up as icicles that can likewise fall and cause property damage or personal injury.

And if water is left to pool in these cold temperatures, there may be delayed damage, the report said. While the cold temperatures today may keep them frozen in place, they could melt en masse when a thaw comes and seep into the home through cracks in a foundation. That can cause a lot of damage to both items inside the house, and to the foundation itself.

Here, too, consumers will likely have a lot of questions about the ways in which this damage may or may not be covered by their standard homeowners insurance policies, and it might be wise for insurers to be proactive about advising people how these concerns may be handled.

Dealing with it properly
Insurers would be wise to impress upon policyholders the importance – first and foremost – of contacting them as soon as possible when damage happens, and properly recording all issues that arise from it, according to the Greensburg Daily News. That means taking photos or video of the damage, and making repairs to prevent any further damage from compounding the problem. However, insurers would also be wise to stress that these should not be permanent repairs, because homeowners may unwittingly invest in some costs that their policies won't cover.

To that end, it's also a good idea for homeowners to make sure they're saving all necessary receipts associated with the repairs and damage, the report said.

Additionally, insurers would be wise to inform policyholders about the most common types of damage that are covered, such as issues caused by wind, rain, ice and snow buildup, etc., the report said. It's also smart to let people know the kind of damage that typically won't be covered, such as removal of fallen trees and water damage from sewers and drains backing up.

Know what isn't covered
Those in the insurance industry know that the kind of water damage that comes with heavy rain, melting snow and the like also often won't be covered, but that isn't always the case for consumers, according to Springfield, Massachusetts, television station WWLP. Such issues are typically considered flood damage by home insurers, and unless a property owner has a separate flood insurance policy, they may be out of luck getting their insurer to cover the costs associated with repairing and replacing whatever is damaged in the incident.

“But surface water, the water we see pooling up in yards that is making its way into basements, that's just not covered in the traditional homeowner's policy,” Bill Trudeau, President of Insurance Center of New England, told the station.

In parts of the country still dealing with extreme cold, that kind of concern won't be something they have to deal with in the near future, but those where temperatures are fluctuating more heavily between freezing and temperate – including Massachusetts – could see an increased risk of such damage in the weeks ahead.

What else can be done?
In addition to documenting the damage that happens in cold weather – and after – homeowners would also be wise to make sure they have taken a careful and comprehensive home inventory, according to the Lillie News. That means taking photos or video of all the objects in every room, and also maintaining a list of the most valuable items in a home. All of this information should then be stored in a safe place, whether that's in the cloud or physically, so that if any major damage happens to a home, the inventory data can be easily retrieved and shared with an insurer during the claims process.

However, many homeowners may not know this is a good idea to follow through on, so insurers would likewise do well to inform them as to why this is such a good idea.

Something else to consider
At this time of year, many homeowners may be worried about the ways in which their home insurance policies will impact their finances in the event of a major problem, or even a minor one. Despite that concern, a recent poll from Policy Genius found that about 1 in every 3{i think AP rules have these written out} Americans who have such insurance have never really examined how their policies changed over time, and therefore haven't shopped around for new coverage every once in a while.

Indeed, nearly half of the people who said they have occasionally shopped around for such coverage – representing roughly 1 in every 6 people with home insurance – haven't done so in the last year, the survey found. Because of that lack of examination, people may be paying far more for coverage than they might need to. More than 2 in 5 who did shop around for improved rates ended up switching.

“It's not uncommon for insurance companies to re-rate on a yearly basis,” says Fabio Faschi, property and casualty team lead at Policygenius. “Insurers are regularly re-evaluating their product to make the most sense in changing markets.”

Nearly a third of those who haven't undertaken this effort say they think it would be too time-consuming, and 1 in 5 said they've simply never thought to do it at all, the report said. However, between 1 in 6 and 1 in 7 each also said they didn't want to do all the paperwork involved, didn't think they would find a better deal or simply didn't know how to shop for better rates.

Why reaching out is important
With all of these considerations in mind, it's vital for insurance companies or brokers to be in regular communication with policyholders or clients to make sure they have a good handle on the ins and outs of their coverage. Those discussions can include everything from costs to what is or is not covered by their policies.

When people have a good understanding of their insurance situations and feel as though they have an existing relationship with their providers, they may be far more likely to be satisfied with their coverage and maintain a long-term relationship with their insurer or broker.