Don't be burned by a flood in your home! What I am talking about is the cost of water damage restoration and the importance of having proper insurance on your property. When basement flooding occurs you will need a certain rider depending on the source of the water. If you have a sump pump go out, and you do not have the rider for sump pump coverage, then your insurance company can and will get out from helping you to cover the damage. No one has a flooded basement fund so it is important to be covered for this kind of situation. Money spent drying a basement is adding salt to a wound.
Insurance companies use riders for a couple of reasons. They can custom build coverages to placate their customers needs. Some people want to spend as little as possible on monthly expenses. By choosing not to have coverage for sump pump failure, if you have a basement, then you are basically gambling that your home will never flood. Problem is that if you have a basement it will eventually flood. It does not matter what steps you take to prevent flooding because they can all fail or be overcome, your basement will eventually flood. That is up to you as the property owner to decide what coverages you need. In my experience, most people that don't have the necessary riders did not even know the riders were optional or even existed.
Thing of it is that with over 20 years of experience and have serviced tens of thousands of homes I have gathered a few helpful tidbits of information. I have heard thousands of people say the exact same thing "I didn't know I needed a rider!" Insurance companies have to make insurance affordable so everyone can afford it. Sometimes it is done in a way that is somewhat sneaky. Maybe it is intentional and maybe it isn't but it sure works out for the insurance companies. First-time home buyers and other people that have never gone through the pain of having a flooded basement would most likely not know to have a rider for flooding. Now the homeowners move in and are unaware of their exposure to risk. The home floods and then they find out they aren't covered. So the homeowners get stuck with the entire cost of the water damage restoration project. The insurance companies wind up not paying for their first claim and save thousands! Then when the homeowner adds sump pump failure the insurance company can ask for even more money because the home has a history of flooding. Even more extra money for the insurance companies! Now that it has flooded the homeowners will take extra steps to prevent it from happening again and odds are it will be years before the basement gets water again. Years of bigger insurance premiums, and thus more profits, for the insurance companies.
I was just in the Philadelphia area due to a flood event. We had a customer with a huge 5000 square foot basement filled with carpet and content. Not only did his sump pump not work when he needed it, he didn't even have one! The builder decided to save some money and not put one into the pit that was there for a sump pump. Turns out that at the last minute the builder decided to add a French drain system. He thought saving a few bucks was a good idea so he didn't purchase a sump pump for the homeowner. Had there been a sump pump the home probably never would have flooded. Since the builder never charged the homeowner for a pump then the builder was not financially responsible. The builder thought the drain would prevent any flooding from occurring but he was wrong. You should take every precaution you can to prevent water damage from occurring and every precaution to limit the potential costs of repairs after flooding does happen.
The homeowner turned to his insurance for assistance but he did not purchase the necessary rider and was denied coverage. With a gigantic basement that was wet, he knew he would need estimates. As the estimates rolled in he was horrified to find out the cost of such an extensive repair. Three estimates before 2nd Chance Water Restoration arrived showed him the same price of just over $25,000.00 for each estimate. When we showed up he didn't mention the previous estimates and left us to give him a price. Since we all use the same pricing system and the numbers didn't change for us. We told him that we also came up with the same price. The difference is we discounted the cost without discounting the service. We wound up doing the job for half the price. We were able to do that because we don't have franchise rules.
Franchise rules are rules from parent companies to their respective franchises dictating things that must be done to the wishes of the parent company. As far as Water Damage Restoration project pricing is concerned they are only in place for bigger nationwide companies. There are all kinds of rules for franchises but we are only discussing the ones concerning discounts for customers. Basically, the parent company that handles the respective franchise has put in place rules that prohibit their franchisees from discounting more than 15 percent of the cost from an insurance estimate. The bigger company requires consistency from its smaller parts. If every franchise was able to control their discounting ability then the franchise would not be able to ensure a great many things. There would be less consistency in bill writing amongst the respective franchises. Different franchises would have different prices and that wouldn't work. Some franchises would give really low prices as we did for the Philly customer. The parent company collects a franchise fee from its franchises on every job. As a result, they want their companies to collect as much as possible so they can get their normal percentage. By making sure their franchises limit their discounts they make the franchises more profitable, thus giving them a greater chance of success. All of these things are good for the parent company and its franchises. Not so much for you the property owner! Now, most independent companies know about the franchise rules and therefore they don't discount more than 15 percent either.