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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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Identifying Water-Damaged HVAC Systems After a Hurricane

The following HVACi article on “Identifying water-damaged HVAC systems after a hurricane” originally appeared in Property Casualty 360.

As the floodwaters recede across the Gulf Coast following Hurricane Harvey, the arduous process of claims investigation begins to unfold. CAT adjusters from across the country are travelling to the impacted areas to assess property losses and assist insurance carriers in reaching accurate settlements.

For many adjusters, one of the most difficult property components to assess is the HVAC system. HVAC equipment is simply too expensive to indiscriminately write replacement estimates, and accurate pricing and availability is also difficult for adjusters to access. Moreover, determining if the equipment is damaged is itself a difficult task – it’s not always a matter of just turning on the system to determine whether or not it works. Many of the properties are still without power, and once restored, diagnosis may prove difficult without first determining the full extent of potential damages.

Related: HVAC compressor damage: Lightning or wear & tear?

Hurricane Harvey: Water Levels on Condensing Unit

This illustration depicts the amount of water that can accumulate before affecting a ground-mounted condensing unit. 

Outdoor equipment inspection

The first component to be assessed for damage is the outdoor condensing unit, typically located on the ground or on the roof of the property. If the unit is located on the roof, it is unlikely that it suffered any damage from floodwaters, although it should still be checked for any additional storm damage.

Condensing units are designed to withstand the elements, but muddy, rushing floodwaters can impact ground-mounted systems and lead to repair actions ranging from a simple coil cleaning to a full system replacement. The water can typically rise to the compressor terminals before causing significant damage, as seen in the illustration here.

When assessing the outdoor condensing unit, here are a few things to look for:

  1. Check for dirt and debris stuck in the condenser coil fins. Where the debris ends typically indicates how high the floodwaters rose on the unit.
  2. Water lines on the system’s back panel, its electrical compartment, or an adjacent building wall also provide clues as to how much of the condensing unit was exposed.
  3. Based on how high the water rose, determine which components the water may have compromised, such as the compressor, electrical compartment and fan motor.
  4. Look to see if the condensing unit shifted on the pad. If shifting did occur, check the copper lineset for any breaks or kinks. A breached lineset may have allowed contaminates to enter the refrigerant loop, which could damage the compressor and other components.

Related: Know these covered losses and exclusions after a collapse

Hurricane Harvey: Water Line on Condensing UnitWater line on condensing unit indicating how high the floodwaters rose

Indoor equipment inspection

Depending on the type of HVAC system, an indoor furnace or air handler may also be present. The location and orientation of the indoor equipment will influence the amount of damage the unit sustained. A horizontal furnace mounted in the crawlspace is typically more vulnerable to water damage than a vertical furnace in a lower floor utility closet or basement (unless the basement was completely flooded). Furnaces or air handlers mounted in the attic or on a second floor, on the other hand, may have no damage whatsoever.

Hurricane Harvey: Water Levels on a Horizontal Furnace

How various water levels can impact a horizontally-mounted furnace in a crawlspace

Water levels in horizontal systems

A horizontal furnace or air handler in a crawlspace is particularly susceptible to water damage. The amount of water that can inundate the crawlspace before impacting the equipment depends on how high the system is mounted (sometimes dictated by building code) above the ground. Once the water reaches the system, however, it will likely suffer significant damage, as seen in the illustration here.

Related: Texas’ No. 1 homeowners’ insurer responds to Harvey, offers tips

Hurricane Harvey: Water Levels on a Vertical Furnace

How a vertically-mounted furnace can be affected by floodwaters. 

Vertically mounted units

A vertically mounted furnace may be more protected from water damage. This orientation will not typically sustain significant damage until the water reaches the burner compartment (found in the middle of the unit, several inches above ground level), as seen in the illustration here.

Here are a few things to look for when assessing the indoor equipment for floodwater damage:

  1. Look for a water line on the outside of the furnace/air handler, on rigid ductwork or on an adjacent wall.
  2. Check the control board for water damage. Often (depending on when it was printed), the board’s writing will “bleed” when exposed to water, providing a useful clue in estimating the water’s reach.
  3. Examine any sheet metal ductwork for premature rusting or corrosion.
  4. Flex ductwork will sag and duct board will swell after getting wet, indicating floodwater contact.
  5. The insulation on the inside of the blower compartment will often be damaged by the water.

Related: Keys to identifying hail damage to HVAC condenser coils

Hurricane Harvey: Water Line on a Vertical Furnace

Water line on furnace indicating how high the floodwaters rose

Once you have determined (both indoor and outdoor) how much water damage an HVAC system sustained, you can begin the process of establishing a proper scope of repairs. It is important to keep in mind that even in severe flood scenarios it is rare that a full system replacement is necessary. In many cases, individual components can be replaced and systems can be cleaned to achieve pre-loss condition. Remember, a portion of the system (or in the case of packaged units, the full system) may be located high enough on the property to avoid the floodwaters from the hurricane, and could thus significantly influence the required scope of repairs.

For information on wind and lightning damage accompanying hurricane claims, you can access our adjuster toolkit for hurricane claims. You can also review a labeled split system diagram and a labeled packaged unit diagram, to assist in identifying components and their susceptibility to floodwater damage.

 

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