HVAC Failure

Step-by-step checklist

Identify

• Contact the claim adjuster right away. Ask them to hold the scene and for permission to retain an expert at the client's expense. Note the call in the file.
• On every claim, ask the client whether they want an origin and cause investigator to review the scene, or confirm one is already assigned. Note their answer in the file so the decision is on record.
• Make sure no evidence is touched or moved until the expert has secured the scene
• Get the client's approval for the scene exam cost. Most run at least $1,600 with travel, the day rate, and expenses.
• Find where the water came from: drain line, pan, pump, or coil
• Photograph the drain setup and data plates before any repairs
• Get the install date and any service agreement

Hands off until the expert arrives. Nothing at the scene gets touched, moved, repaired, or thrown out until the origin and cause investigator has secured it. Evidence that's moved early can sink the whole recovery.

Notify

• Get an expert from the insurance carrier, or an HVAC tech willing to write a statement of findings
• Keep every part the repair tech removes
• Notify the installer, service company, and manufacturer

Investigate

• Check the code: secondary pan, secondary drain, or a float switch that shuts the whole system off
• Pull service invoices and smart thermostat history
• Hold the scene exam. Lab-test any failed pump, switch, or electrical part.
• Receive and review the expert's report

Demand

• Review payments and out-of-pocket costs
• Sort the supports into photos, estimates, invoices, mitigation moisture logs, and reports
• Send the full demand packet

Negotiate

• Follow up. No response? Send the second demand.
• Check the service contract for liability caps or waivers
• If liability is accepted, negotiate. If not, review for ADR.

Settle

• Review the release
• Receive payment, issue the deductible and client payments
• Final file review, then close

1. Identify

How HVAC systems cause water losses

• The condensate drain line clogs with algae or debris, and the pan overflows
• There's no secondary pan, secondary drain, or float switch to catch the overflow
• The drain line is disconnected, unglued, not sloped, or ends in the wrong place
• The drain pan cracks or rusts through
• A frozen evaporator coil melts, often from low refrigerant or a dirty filter
• A condensate pump fails

How HVAC systems cause fires

• Electrical component failures, such as capacitors, blower motors, and loose wiring connections
• Furnace ignition or burner problems
• Improper venting on gas equipment
• Equipment installed too close to insulation or other materials that can burn, causing it to overheat

Maintenance, installation, service, or defect?

Responsible parties to consider

• The installer, and the builder on new construction
• The HVAC service company, especially if the insured had a maintenance agreement
• The equipment manufacturer, plus makers of the condensate pump and float switch
• A landlord, if the insured is a tenant
• A home warranty company and the contractor it sent, if the unit was serviced under a home warranty

Identify the equipment

Photograph the data plates on both the indoor unit (furnace or air handler) and the outdoor unit. You need the brand, model, and serial number. Serial numbers usually encode the manufacture date, so decode them with the manufacturer's guide or an online decoder. Get the install date from the permit or invoice.

2. Notify and investigate

Stop the evidence from being fixed away. The HVAC tech who responds will clear the clog, reglue the line, or swap the pump. Ask the insured to have them photograph everything first and keep any parts they remove.

Home warranty companies: protect the evidence before the tech arrives

Home warranty companies often send their own contractor, and the tech usually collects the old parts as they finish the repair. Once those parts leave the house, your evidence is gone. Call the insured before the tech arrives, and have them:

1. Tell the tech not to take any evidence. All old parts, lines, pans, and switches stay at the home.
2. Show the tech the origin of the loss before any work starts, so the tech can photograph it before the repair.
3. Take their own photos and video of the origin and the whole setup before anything is touched.
4. Get the tech's name, company, and the warranty claim or work order number.
5. Bag and label every removed part and keep it somewhere safe until the exam.

Then put the warranty company and its contractor on notice. Request the warranty contract, the dispatch and work order, and the tech's notes and photos. Read the warranty contract for any liability limits or waivers.

Who to put on notice

• The installer and any service company
• The equipment manufacturer and any component maker, like the pump or switch manufacturer
• Each party's carrier, once known
• The home warranty company and its contractor, if one was involved

Evidence checklist

• Photos and video of the drain pan, primary and secondary drain lines, where they end, the float switch and how it's wired, the filter, and the data plates
• Any parts removed during the repair
• The maintenance or service agreement, and every service invoice
• Installation invoice and permit
• Smart thermostat history. Many thermostats log runtime and error alerts, which can show when the system started failing.
• Mitigation records, not just the estimate. Get the moisture maps, daily moisture readings, drying logs, equipment logs, and photos showing where the water came from and how far it spread. Record them in the file and send them to the adverse carrier with the demand. The estimate alone usually isn't enough to prove the water damage.

Caution: when the mitigation company makes it worse. Occasionally the mitigation company worsens the damage, for example by showing up late, missing wet areas, pulling the drying equipment too early, or letting mold take hold. When that happens, document it clearly: the timeline, the moisture readings from each visit, and photos. The adverse carrier will argue it isn't responsible for the added damage, and the mitigation company may become a responsible party for that part of the loss.

Code checks

When the equipment is in an attic or above a finished ceiling, where a clog could damage the building, IRC M1411.3 requires one of these:

• A secondary pan at least 1.5 inches deep, with its own drain ending somewhere visible
• A secondary drain line from the primary pan, ending somewhere visible
• A float switch that shuts the equipment off when the pan fills

The primary drain must be at least 3/4 inch and sloped at least 1/8 inch per foot. It can't drain into a wall, ceiling, or anywhere it causes damage. A float switch should shut down the whole system, not just the compressor.

Exams

Hold a joint scene exam before repairs when possible. For fires, and for component failures that need testing, hold a joint lab exam and notify every party first.

3. Demand, negotiate, and settle

Liability theories

• Against the installer: negligent installation and code violations
• Against the service company: negligent service, such as failing to clear or treat the drain line during a maintenance visit, plus breach of the maintenance contract
• Against the manufacturer: product defect and breach of warranty

The maintenance agreement is the key document. If the insured paid for seasonal tune-ups that include cleaning the condensate line, a clog soon after a visit points straight at the service company. Read the contract closely, because many cap their liability or include a waiver of subrogation.

Defenses to expect

Negotiating and settling

• HVAC contractors usually carry commercial general liability coverage. Get their certificate of insurance.
• Expect the installer and service company to blame each other. Keep both on notice.
• Review the release with the release checklist, then close with the standard closing letter and the deductible reimbursement letter.

4. Letters for this loss

Sources

• IRC M1411.3 condensate requirements: secondary pan and float switch (Jaspector)
• M1411.3 Condensate disposal (ICC)
• Statutes of limitations vs. statutes of repose (MWL)