Just Mud at Safeco

Did you hear about the time it rained during a ballgame at Safeco Field, and the field was too damaged to play? Know why? Safeco didn't cover it.

The maze of language Safeco Insurance uses in its Landlord Protection insurance policy is convoluted, unclear, and ambiguous. For anyone wanting coverage, the exclusions are laced with so many "howevers" that one could assume everything is covered, but in fact, my experience with Safeco is that nothing was covered.  So, after they denied me on the "exclusions" clauses in the policy, which are apparently so pernicious in the policy, it would seem the very ink used is infecting, I wrote the following to the governement agency watching out for us minions.

"To the Insurance Commissioner:

Safeco Insurance denied my claim for water damage in a home I rent out.  They did this, according to Safeco representative Jon Tremble, because of Exclusion Numbers 10, 13,  and 15 in the Landlord Policy I have with them.  Tremble said that 10 states that it’s “faulty workmanship,”  13 states it’s “wet or dry rot” and Number 15 states that it was “continuous seepage over a period of time.”

 Tremble explained to me that Number 10 applies because the plumber who repaired the pipe said it became loose because it was not glued properly. I told Tremble that I have had no plumbing work done there in the eight years I have owned the house.  He responded that it could have been something “that was glued but became loose over time.”

Tremble then said Number 15 applies because the plumber had said it was leaking for at least a year. But, I told Tremble, my renter just discovered it. Tremble gave me an example of something that would be covered: If a leak was accidental and you just notice water, it would be covered. I told him my tenant did just discover the leak. Tremble said the plumber told him the tenant “saw it before, but the tenant said it went away.” I responded that my tenant told me he saw it that week, and when it did not go away he notified me, and I made a claim. Tremble did not respond to this. It seems unfair that Tremble uses the sole word of a plumber and there is no evidence that he or his adjuster interviewed the tenant. Further, the pipe was a drain pipe in the wall behind cabinets and a dishwasher. The leak finally occurred when the moisture broke through the wall.

As for the policy, Numbers 10, 13, and 15, the clauses Tremble is using to withhold money, speak unclearly to what Tremble is asserting.

10. States “faulty workmanship” however any workmanship, repairs, construction, remodeling etc. . . was done at least over eight years ago. Tremble stated that even if it was glued, it came loose about a year ago. Where is any evidence of faulty workmanship or repair? The wall deteriorated from the leak and water finally escaped to the floor where my tenant saw it and reported. Clause 10 also states: “However, any ensuing loss not excluded or excepted by any other provision in this policy is covered.” (We’ll label this Ambiguity #1)

13. Although the clause excludes dry or wet rot it also states: “This exclusion does not apply to the extent coverage is provided for in the Other Coverage 11.”  (We’ll label this Ambiguity # 2) So let’s follow the trail to Clause 11:

11. Fungi, Wet, or Dry Rot, or Bacteria. We will pay up to $5,000 for: (there is then a list a.b.c.d.. of what will be repaired). 11  e. states “Coverage D – Loss of Rent, Rental Value and Additional Living Expenses. “Under 11 e. it states  “g. are not excluded under General Exclusions.”  What isn’t? 11 e.? or something else? (We’ll label this Ambiguity # 3)

On to Tremble’s other exclusion, 15:

Tremble cited the phrase “continuous or repeated seepage or leakage of water . . .over a period of weeks, months or years . . .”  Part of Clause 15, however, states: “However, any ensuing loss not excluded or excepted by any other provision in this policy is covered. (We’ll label this Ambiguity #4)

So, now let’s go to what is covered.

In Clause 3 of Exclusions (which Tremble did not mention at all) states “d. water which escapes or overflows from drains or related plumbing appliances on the residence premises. However, this exclusion does not apply to overflow and escape caused by malfunction on the residence premises, or obstruction on the residence premises, of a drain or plumbing appliance on the residence premises” Actually, this is not ambiguous: the drain in the wall leaked and it is covered.

In summary, I truly do not see how a case could be made definitively that any of the exclusion clauses (10,13,15) that Safeco is using to deny this claim substantiate not paying this claim.

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Although I am still waiting to here from the commissioner, I've received two letters from Safeco telling me basically the same thing: denied because of clauses 10,13,15.  The rainouts continue. Here is the second letter sent to me after Safeco was contacted by the Insurance Commission of my complaint:

Dear Mr. and Mrs. Van Zutphen:

This letter is in regards to the claim filed on May 9, 2013 for water damage in the kitchen area of your rental property in Tygh Valley, Oregon.  We have reviewed the information submitted via the Department of Insurance regarding your clam.  Per my conversation with Mr. Van Zutphen on May 9, 2013 it is our understanding that your tenant informed you of the damages in the kitchen as they just discovered them from an unknown leak.

During the course of the investigation of the claim we contacted your plumber, Devco Mechanical.  According to Mike with Devco Mechanical, a T-fitting for the waste water drain line from the sink and dishwasher failed causing water to leak into the wall cavity. Furthermore, Devco stated that every time the tenant ran the sink the drain water would drain into the wall. Devco stated the reason for the failure of the T-fitting was that it was not glued together upon the installation of the fixture. Devco stated the T-fitting had been failing and leaking for at least one year. Additionally, black mold on the wall and dry rot on the sheathing are evidence of a long term leak.

In addition to the Devco Mechanical investigation an independent adjuster was assigned to investigate the claim. According to the adjuster the water drain line from the sink and dishwasher leaked in the wall behind the dishwasher. The adjuster noted water damage approximately one foot up from the floor on the South wall behind the refrigerator and damage to the tile flooring as it had buckled and been dislodged. He in turn contacted Mike with Devco Mechanical who had completed the repairs to the drain line. The adjuster’s discussion with Devco verified the facts of the loss and the lengthy leak of this drain line.  

As noted in the original denial letter dated May 21, 2013 the problem most likely stemmed from when the waste water drain line T-fitting was installed and potentially before the policy inception.    
Please refer to your Oregon Landlord Protection Policy – Special Form P-4103OREP 4/09 where it states the following:

Page 2
Joseph & Margaret Vanzutphen 
June 11, 2013
CV1761 07/12
…

GENERAL EXCLUSIONS
…
10.  Planning, Construction or Maintenance, meaning faulty, inadequate or defective:
a.  planning, zoning, development, surveying, siting;
b.  design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction;
c. materials used in repair, construction, renovation or remodeling; or
d.  maintenance;
of property whether on or off the Described Location by any person or organization. However, any ensuing loss not excluded or excepted by any other provision in this policy is covered.
…
13.  Fungi, Wet or Dry Rot, or Bacteria meaning the presence, growth, proliferation or spread of fungi, wet or dry rot, or bacteria. This exclusion does not apply to the extent coverage is provided for in the Other Coverage 11. Fungi, Wet or Dry Rot, or Bacteria under Dwelling Coverages.
…
15.  Any presence or condensation of humidity, moisture or vapor; or the continuous or repeated seepage or leakage of water or steam that occurs over a period of weeks, months or years, including but not limited to that from, around, through or contained by:
a.  plumbing, heating, or air conditioning systems or fire protective or other sprinkler systems;
b.  household appliances; or
c.  roofs, roofing materials, gutters, downspouts, skylights, windows, doors, vents, insulation and siding or other exterior finish materials, or any part, including the application or use of accessories, flashing, caulking or sealants.
However, any ensuing loss not excluded or excepted by any other provision in this policy is covered.

Page 3
Joseph & Margaret Vanzutphen 
June 11, 2013
CV1761 07/12
…
Based on the preceding policy language, we are unfortunately unable to provide coverage for this loss.  You do have an additional coverage that we investigated to see if it would apply here.  Please refer to your insurance policy form HOM-7030OREP 4/09:
 …
 ADDITIONAL PROPERTY COVERAGES
The following Additional Property Coverages are subject to all the terms, provisions, exclusions, and conditions of this policy.
…
11.  Fungi, Wet or Dry Rot, or Bacteria. We will pay up to $5,000 for:
a. the direct physical loss to covered property caused by fungi, wet or dry rot, or bacteria;
b. the cost to remove fungi, wet or dry rot, or bacteria from covered property;
c. the cost to tear out and replace any part of the building or other covered property as needed to gain access to the fungi, wet or dry rot, or bacteria;
d. the cost of any testing of air or property to confirm the absence, presence or level of fungi, wet or dry rot, or bacteria, whether performed prior to, during or after removal, repair, restoration or replacement. The cost of such testing will be provided to the extent that there is a reason to believe there is the presence of fungi, wet or dry rot, or bacteria; and
e. Coverage D — Loss of Rent, Rental Value and Additional Living Expense.
This coverage only applies when such loss or costs:
f. are a result of a loss we cover that occurs during the policy period;
g. are not excluded under General Exclusions; and
h. result after all reasonable means are used to save and preserve the property from further damage.
This coverage does not apply to loss to lawns, plants, shrubs or trees.
Regardless of the number of claims made or the number of locations, the $5,000 limit of liability is the most we will pay during the policy period shown in the Declarations for the total of all such loss or costs for Coverages A, B, C and D, and does not increase the limit of liability for these coverages.
…
In order for the additional coverage to apply, the fungi, wet or dry rot or bacteria must be caused by a covered cause of loss and not an excluded.  In this case, the damages are excluded as well as the cause and origin of the loss.   

As you can see in the above-referenced policy language and the facts as we know them; the damages to your rental property’s kitchen are not covered under your policy due to long term seepage and leakage and the improper installation of the drain line’s T-fitting. Unfortunately the policy does not speak to when the leak was noticed and we are unable to assist you with any necessary repairs to your home.  

Safeco Insurance Company of Oregon respectfully continues to reserve any and all rights and defenses under the policy and Oregon State law, which may now exist or which may arise in the future. These rights and defenses specifically include, but are not limited to, the right to a properly completed Proof of Loss, Examination Under Oath, inspection of property, appraisal and the passage of time. We do not waive any of the terms, conditions or requirements of the insurance policy.
If you have any questions or concerns please feel free to contact me.
Sincerely,
Jon Tremble 
Hours: M-F 8:00 to 4:30 PST
Safeco Insurance Company of Oregon
(800) 332-3226 Ext: 7638380
(509) 944-8380 Fax: (888) 268-8840

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NOTE: Insurance Commissioner agent sided with Safeco and closed the case. "Insurance companies are usually not liable for water damage."

Feel free to call Jon Tremble and let him know you will not be buying insurance from him or his ilk. Notice that Tremble does no more to refuting my points than originally when he spoke to me on the phone. He does not mention interviewing the tenant, and  in his "investigation" stands by the statements made by "Mike" from Devco; and notice that "Mike" becomes the spokesman for the whole company as he is subsequently referred to as "Devco." Also, I spoke with the "independent investigator" Jim Perkins as to why my contractor estimated the damage at $7,100 and his estimate was only $2,500. Perkins said he has to use the estimating software Safeco designates, and the $2,500 is the figure resulting from use of Safeco designated software. So much for an "independent investigator."

Further, notice Tremble says they "investigated" another part of the policy that could cover this. Well, he did not investigate this until after I complained to the Insurance Commissioner. And, he does not address my question of whether it falls under "Coverage D" or 11. One glaring absence though is the point I made of Clause 3 coverage, where the policy stated it covered the leak; Tremble does not address this at all. Finally, I e-mailed the Insurance Commission representative with language from my Home Inspection in 2005 which stated all kitchen plumbing was in good condition. No response to this at all except this vague reference:
"As noted in the original denial letter dated May 21, 2013 the problem most likely stemmed from when the waste water drain line T-fitting was installed and potentially before the policy inception." Now, Mr. Tremble, you of all people, with your verdict hanging on statements like "as you can see by above-reference policy language" are resorting to non-definitive wording like "most likely" and "potentially." Mr. Tremble, the murk gets darker.

UPDATE: November, 2013: I sued Safeco in small claims court. Mr. Tremble, trying hard to get off the phone ASAP, was the one to have to inform me that Safeco would settle and give me a check for $5,000.