[Annual Termite Control Issue] The High Cost of Water Damage

You wouldn’t think water damage claims would be a big deal in the pest control industry, but they can be. A little foresight and prudence can save your business a lot of headaches and money in the long run. Here are some examples of water-related mishaps that have come across my desk, and how to avoid them.

Turn It Off! A company was treating a condominium for subterranean termites, and while drilling, hit a water line. The technicians could not find the water shutoff valve, and consequently flooded three other units.

A couple of things could have been done to stop this from becoming a $28,000 claim. Prior to starting the job, the technicians should have located the shutoff valve. This would have enabled them to keep the damage to a minimum. Second, the company should have used a ground-fault interrupter, which would have automatically stopped the drill as it hit the metal pipe.

I have seen several claims resulting from technicians breaking fire-suppressant water lines in homes. Three of them stepped on sprinkler lines while doing wood-destroying organism (WDO) inspections. Check out the cost of these claims: $71,000, $142,000 and $204,000. This is a high price to pay for a WDO inspection — one which would have only netted the company $150 at best.

Slippery Slope. In another case, a technician slipped while trying to retrieve a rat in a snap trap. When he fell, his head hit a sprinkler line, causing it to burst. The homeowner was concerned about mold and demanded the sheet rock, insulation and carpets be replaced for a total of $25,000.

As a result of these accidents, one company stopped performing inspections altogether. Two others now have dual technicians performing inspections — one to inspect, and the other to direct him away from the sprinklers.

I recently processed an $8,000 claim involving a pest control operator who performed a WDO inspection for the sale of a home. One year later, the new homeowner found a leak in the plumbing system of the shower. The homeowner felt the PCO should have found the leak during his inspection, and wanted him to pay for the repairs. There wasn’t much the company could do with this one.

Do the Whole Job. In California when doing a termite inspection, most companies also test the shower pan. This is done by covering the drain, filling the shower with water, and checking for leakage. Another costly claim came about while a company was doing just that.

The technician became distracted by the real estate agent and left the home without shutting off the water. It ran for approximately two days, flooding the hallway and several other rooms. The pest control company’s insurer let the homeowner’s insurance company handle the claim. That was a mistake.

The homeowner had all the walls taken down and all the carpeting removed at the cost of $97,000. If the pest control company’s insurer had processed the claim, they probably would have only repaired the damaged areas — this would have substantially reduced the cost.

In another example, a company was performing some work on the roof of a home. The technicians disconnected the pool solar panel in order to access the work area. They instructed the homeowner not to use the pool pump until the work was completed, but the homeowner forgot and turned on the pool pump.

This caused water to pump into the attic, which in turn caused the ceiling to cave in and land on the person sleeping in his bed. They not only had a damage claim, but a personal injury claim, for a total of $137,000. The company should have turned off the breaker to the pool pump, to be sure.

Weather-related water damage also can play a role in costly pest control claims. A company was hired to treat kiln-dried lumber that was infested with powderpost beetles. As a precaution, the wood was stored outside, so the infestation would not move to other wood on the property.

The pest control company fumigated the infested wood, but failed to cover it back up after clearing the fumigant. That evening, it rained on the exposed lumber. The company said the wood was ruined, and wanted $21,000 to replace it. This could have been avoided if there had been language in the agreement stating once the wood was fumigated, the pest control company was no longer liable for any damage to the wood.

Not all of these claims could have been avoided completely, but the costs could have been kept to a minimum with a little prior thought and planning.

The author is the loss control manager for Capital Risk Underwriters. He has been in the pest control industry for more than 26 years and is certified in all categories in the state of Florida. Contact him at vmorris@giemedia.com.