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Variables Impacting Water Losses in HVAC Claims

Torrential downpours, leaky roofs, and malfunctioning appliances could all lead to HVAC system water damages. Before settling your next water-related claim, consider how these variables impact the scope of damage and possible repair opportunities for residential and commercial HVAC systems.

1) Know the Water Source.
The water type and source are factors in figuring out what’s needed to return HVAC systems to pre-loss condition after a water loss and knowing if it’s a covered peril. Verifying the cause of water exposure can give an early indication of the potential repair scope.

The type of water that contacts property could impact whether policyholder equipment can be repaired.

The type of water that contacts property could impact whether policyholder equipment can be repaired.

Black Water contains contaminated materials with chemicals, sewage, oil, or other dangerous debris and is caused by sewage backup, floodwater, or standing water exposed to sewage. Cleaning or minor repairs to impacted equipment may be more difficult because of hazardous contaminants. This is considered a Category 3 water loss. However, an expert should verify whether the HVAC equipment was exposed to black water, even if it was found nearby.

Gray Water, which can cause a Category 2 water loss, is wastewater from households or office buildings, including dishwashers, washing machines, sinks, showers, and bathtubs. It doesn’t have fecal contamination and is safer and easier to treat, though gray water can still cause HVAC system malfunctions that require repairs.

Clean Water, as the name suggests, is cleaner than other water types and comes from the tap, a broken water line, or rainwater. The scope of damage depends on which HVAC components were exposed. This is considered a Category 1 water loss.

The source of water may also determine whether the loss is a covered peril. Surface water, groundwater, and general flooding caused by an onslaught of precipitation or storm surge are not usually covered in a standard insurance policy. However, a policyholder may be eligible for a settlement for impacts caused by wind-driven rain. Cause of loss verification is imperative to reduce the risk of settling for a non-covered peril.

2) Check for Corrosion, Mold, or Other growth.

Normal system condensation and operation over time may cause corrosion and aren’t necessarily signs of water damage.

Normal system condensation and operation over time may cause corrosion and aren’t necessarily signs of water damage.

HVAC system water losses occur in a short time. However, signs of corrosion, mold, or other growth are evidence of prolonged exposure.

Corrosion may occur on the condenser coil, housed outside on the condensing unit. Long-term exposure to saltwater, sprinkler systems with untreated water, or the combination of dissimilar metals and water can accelerate corrosion. These are likely signs of wear and tear and are typically not covered. Verified water losses may be impacted by corrosion in that it limits some repairs that can be made. Corroded condenser coils usually can’t be combed and may require coil replacements to return to pre-loss condition.

Rust and corrosion occur elsewhere on an HVAC system. Sheet metal ductwork and other internal metal components may also be impacted by long-term water exposure – even from normal operation. An equipment assessment would determine whether corrosion or other signs of wear and tear contributed to the loss.

3) Determine How High the Water Reached on the HVAC Equipment.

The height of water exposure could determine whether critical HVAC components have been impacted.

The height of water exposure could determine whether critical HVAC components have been impacted.

A major variable impacting scope of damage is the height of water exposure.

An HVAC system’s condensing unit is most susceptible to weather-related water losses. Fewer repairs may be needed if water exposure is lower on the equipment because critical components are near the top. Water exposure to the compressor, electrical compartment, or fan motor may require more major repairs.

Inside a structure, HVAC equipment’s location and whether it sits horizontally or vertically impacts water losses. Crawlspaces, utility closets, and basements are more likely to sustain flooding events than attics. However, attics may be affected by roof damages and other internal leaks.

Critical components are more at risk for a water failure in a horizontal furnace or air handler. Water would need to reach higher levels to impact essential equipment in vertical units. Building codes may dictate the height of HVAC system installation for this reason. Ductwork and insulation are also prone to water losses that require repairs.

Look for water exposure lines to determine how high water reached. Lines of dirt and debris on the system’s back panel, electrical compartments, and adjacent building walls may be visible. Equipment labels with ink appearing to run may also indicate water exposure.

Whoever is evaluating the HVAC system for losses should consider all evidence to make more accurate determinations.

4) Verify Contractor Recommendations.

The force of water could cause HVAC equipment to become displaced and require moderate to major repairs to the system.

For example, condensing units may shift on their pads. If the connecting lineset has any breaks or kinks, contaminants may enter the refrigerant loop, causing extensive damage to the compressor or other components. Major repairs may include replacing the condensing unit, lineset, and other equipment to ensure compatibility between the internal and external equipment. Be aware that contractors may recommend full-system replacements once repairs reach this moderate level. However, this is rarely a necessity, and should be verified.

Have a claim for a water-impacted HVAC system? Policyholders likely don’t provide information about these variables that impact water losses when filing their claim. Let HVACi do an objective, comprehensive damage assessment for you to determine cause of loss, scope of damage, and the most applicable repairs and replacements – without slowing down the claims process. Submit the claim to the experts at HVACi.

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Essentials of Settling Water-Related HVAC Claims Webinar Recording

Floods, foundation leaks, sump pump failures, and roof leaks can cause major damages to homes and businesses. Among the items impacted are HVAC systems. By the end of the Essentials of Settling Water-Related HVAC Claims Webinar you’ll know about water’s impact to split systems, ductwork, and package units, among other components.

Topics include:

  • The sources of water that result in HVAC system property claims
  • HVAC systems and components most commonly involved in water-related claims
  • Water-related damages and whether they could be repaired or replaced
  • Real-life water-related HVAC claim scenarios

Watch our Essentials of Settling Water-Related HVAC Claims Webinar recording by filling out the form provided.

Important: Pre-recorded webinars do not qualify for CE credit.

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Webinar: What Makes Pool and Hot Tub Claims Different?

July 20, 2022, at 2 PM ET

As the weather heats up, customers are using their pools to cool down. Malfunctioning pool and hot tub components could lead to costly claims, particularly if you aren’t as familiar with the types policyholders may have or what repairs could return them to pre-loss condition.

You can learn more about these claims in StrikeCheck’s webinar, What Makes Pool and Hot Tub Claims Different? Technical Education Manager Jay Dykstra will cover:

  • Pool and hot tub equipment claims significance
  • Types of pools and hot tubs and their unique components
  • Reported vs. actual causes of loss
  • Real-life pool and hot tub claim scenarios

CE credit is available for participating adjusters with licenses in Florida, Mississippi, North Carolina, *Oklahoma (*pending state decision), Texas, and Wyoming.

Fill out the form to register for this popular webinar topic. If you can’t attend, you’ll still receive the webinar recording and presentation handouts after it takes place; however, previously recorded webinars are not eligible for CE credit.

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HVAC System Water Damage Claim Case Study

Imagine walking into a basement covered in an inch of water. The policyholder who did was sure the furnace and ductwork located there were casualties of the flood. Luckily, the adjuster sought an HVAC system expert to verify scope of damage before settling the claim and learned cleaning was all the equipment needed to return to pre-loss condition.

HVAC system losses have varying degrees of damage, and adjusters need answers quickly. Fill out the form to read how HVACi helped this carrier ensure the claim was settled quickly and accurately – and how the team can do it for your HVAC and Refrigeration claims, too.

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Scary Story: Water Loss

Winter temperatures posed a threat to a commercial policyholder who filed a claim with multiple HVAC systems. The adjuster needed to handle the claim accurately while also facing time pressures.

Fill out the form to read this Scary Story about a sprinkler line break that affected eight HVAC systems. You’ll find out how HVACi evaluated the systems to determine the best settlement recommendation and course of action to return the policyholder to pre-loss condition.

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Heating Claim Case Study

A sewage backup could have had disastrous effects for a commercial policyholder. Characteristics that affect a claim include the type of water that touched the equipment, what components in the equipment were impacted, and how long water contact was sustained. The carrier handling the claim described in this case study didn’t assume the incident caused enough damage to require a furnace and water heater replacement. The adjuster sought HVACi’s help to verify cause of loss and scope of damage before settling the claim.

Fill out the form to read about our recommended repairs and settlement for this claim and how our team came to that conclusion. Then experience for yourself what benefits your carrier could have from our HVAC and Refrigeration assessment solutions.

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Water Damage Claim Case Study

Not sure whether contractors’ recommendations for full replacements are necessary when settling your policyholders’ claims? Neither was the adjuster handling this residential claim about an HVAC system that was near a leaking water heater and sustained damage. The carrier sought the HVACi team’s help to quickly and accurately assess the HVAC equipment to determine cause of loss and scope of damage and to objectively recommend the best steps to return the policyholder’s system to pre-loss condition.

Fill out the form to get your copy of the water damage claim case study to see how our experts’ analysis compared to the contractor’s more than $18,000 replacement estimate.

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Understanding Water Damage in HVAC System Claims Guide

Rains, flooding, and leaks can all cause water to get into places it shouldn’t be – including your policyholders’ HVAC systems. But when might an HVAC system require minor or major repairs or replacements because of water?

Fill out the form to receive the Understanding Water Damage in HVAC System Claims Guide. It outlines HVAC components susceptible to water damage, water-related concerns, and HVAC system malfunctions that can cause water damage. This one-page guide also has a labeled diagram of a split system depicting the water danger zones. Keep a copy of this guide on hand for your next water damage HVAC claim.

Want to know even more about water damages to HVAC systems? Read When Water and HVAC Systems Mix, It’s Not Always A Total Loss.

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When Water & HVAC Systems Mix, it’s Not Always a Total Loss

The following article on “When water & HVAC systems mix, it’s not always a total loss,” written by Jay Dykstra of HVACi and StrikeCheck, was originally published on Property Casualty 360.

Settling water loss claims isn’t cut and dry. Water isn’t an automatically covered loss, such as damage that originates from flooding vs. a pipe leak. What’s more, policyholders and their contractors may feel the extent of the damage, particularly for HVAC systems, warrants major repairs or replacements, even when it doesn’t. This could result in a leak of a different sort. Companies can reduce the risk of claims leakage from water-damaged HVAC system claims by understanding how equipment can be impacted.

HVAC components that could be compromised

In 2020, 83% of the water-damaged HVAC equipment our company evaluated could be repaired. Among the factors that play into that determination is which components are most at risk.

The height that water accumulates impacts damage risks to a condensing unit.

Residential policyholders are more likely to have split systems that have components indoors and outdoors, and commercial policyholders have a higher number of package units that are entirely outside. While external HVAC system components always have a higher risk for water damage, particularly during severe weather such as the upcoming hurricane season, equipment located on the ground is even more susceptible.

Water in the lower parts of the condensing unit typically isn’t cause for concern. It becomes an issue when it goes higher on the equipment and reaches the compressor terminals. Areas prone to flooding may require policyholders to raise their equipment one or two feet above base flood elevation using a platform of concrete or masonry block to prevent this from occurring.

Once water reaches the system’s electrical components, repairs are more challenging, particularly if saltwater has made contact. Even in this scenario, full replacements are unlikely. Last year, the average repair cost for a water-damaged split system was $3,541, while the average repair cost for a package unit was $2,203.

If the condensing unit is moved off its pad, the biggest risk is that the copper lineset will break or kink. This increases the chances for contaminants to enter the refrigerant loop, which could cause major damage. If a replacement was warranted, the average cost for a split system last year was $9,295.

Outdoor components aren’t the only HVAC equipment susceptible to water damage. Indoor furnaces or air handlers in split systems can be compromised, particularly if water causes a short in the electric circuits and damages wiring, motors and the electronics.

Horizontal furnaces may have significant damages sooner because the burners are closer to the ground.

The amount of damage indoor equipment sustains depends on type and location. A horizontal furnace in a crawlspace will have significant damage sooner because of its proximity to the floor. A vertical furnace is more protected because the burner compartment is higher up, though water could reach the blower wheel and motor, which could require repairs. Equipment housed in the attic is least likely to have water damage unless the roof leaks onto it.

When considering claims with damage to indoor equipment, adjusters should make sure an HVAC expert looks for a water line, checks the control board for damage and evaluates the ductwork. There could be premature rusting or corrosion in sheet metal ductwork, flex ductwork could sag or ductboard may swell. Insulation inside the blower compartment could also become water-damaged.

Other water-related concerns

HVAC systems are designed to withstand some impacts. It’s unlikely large amounts of rain will harm the condensing unit or package system directly. According to the CCG IQ Annual Report, water was the actual cause of loss for only 4% of the HVAC systems that carriers assigned to HVACi. Water is often not the direct cause of loss but could be related to other perils causing damage.

Erosion: Flood water from storm surges or water falling too quickly at one time can cause erosion and wash out what’s underneath the condensing unit. Erosion and flooding could take the equipment off the pad, wash the unit away or cause it to not be level. Depending on how far off the original location it is, there could be major damage to the condensing unit or it could cause the connecting lineset to break.

Water may not be a direct cause of damage. Instead, water could push debris and other items into an HVAC system and damage it.

Debris: Water may not be the cause of loss if it pushes debris and other foreign objects into the HVAC equipment. This could cause minor to major damage. For example, debris could become lodged in the condenser coil fins. In many cases, the fins can be carefully washed out to remove the debris, but if the fins are flattened too far or are torn, the coil may need to be replaced. Even then, full system replacements are unlikely. However, if water pushes larger or heavier items into the HVAC system, more major repairs may be necessary.

Corrosion: The condenser coil consists of copper tubing covered in aluminum fins that are exposed to the elements that lead to corrosion, particularly saltwater or untreated water that has a low pH value. This can deteriorate the coils and weaken their integrity; however, this would be a sign of long-term damage. Corrosion could also impact indoor ductwork that would require policyholder action.

Mold: Wet ductwork could cause mold or mildew, which could impair air quality and become a health hazard.

Because water isn’t frequently a direct cause of loss and isn’t always a covered peril, it’s critical insurance professionals verify the cause of loss and scope of damage before settling the claim. Often individual components can be replaced to return the HVAC system to pre-loss condition without a full replacement. Don’t add claim leakage to the consequences of water-related damages.

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HVAC Water Damage Overview

Water damage  can occur at any time of year, whether due to natural or man-made circumstances. HVAC systems are susceptible to water losses from man-made causes such as water leaks in the home or frozen pipes and also natural sources like floods and hurricanes. Although outdoor condensing units are designed to withstand the elements, flood and storm water can rise and cause significant damage to components. Additionally, heavy rains not only cause HVAC damage from backup of water in yards, crawl spaces, and basements, but top down water from blown or leaking roofs can also damage indoor equipment housed in the attic. Fortunately, last year over 50% of residential water damaged HVAC systems could be restored to pre-loss condition by a repair. This illustrates the importance of understanding how these systems are commonly affected by water. Download our adjuster guide to prepare for the various types of water damage you might see affecting HVAC systems when handling these types of claims. 

For more information on identifying water-damage HVAC systems, check out our blog.

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