Herald JournalHoward Lake-Waverly Herald, July 22, 2002

Exceptions in HL insurance policy leave residents uncovered

By Lynda Jensen

Exceptions in the insurance policy purchased by the City of Howard Lake will turn out to be useless for most citizens who incurred sewer backup problems related to flooding June 25, as discussed at the city council meeting Tuesday.

Council members met with insurance agent Duane Burkstrand, who reported the situation.

Several months ago, the city took out a no-fault rider on its insurance policy that would have secured loss from sewer backups. "The city bought and paid for the best policy they could get," City Administrator Kelly Bahn said.

This is the first spring season that the city had the policy enacted, Burkstrand said.

In that policy, there are three exceptions, Burkstrand said:

· if the power is out for 72 hours (which it was not, Burkstrand said).

· if the area is designated as a disaster area (which it was, Burkstrand said).

· if a 100-year flood event was determined (which it was, Burkstrand said).

The unthinkable ­ that is, the latter two exceptions ­ mean that the insurance will only cover damage caused from liability, or cause that can be attributed to the city's error, only, Burkstrand said.

In fact, before the area was declared a disaster and a 100-year flooding event, Burkstrand was distributing information that later turned out to be incorrect, he said. The exceptions happened a number of weeks after the flood event.

"We could have just as well threw that $1,100 on the street ­ and let our citizens pick it up," Council Member Shelly Reddemann said, referring to the insurance rider.

"It's still a good policy," Bahn exclaimed, saying that even six months ago those exclusions would have been thought to be inconsequential.

"It sure didn't do four people on Fourth Avenue any good," Reddemann said. "Tell them how good that insurance is," he said.

"This is the best we can get," Bahn said.

"It's still an opening that we could sue," Reddemann said.

The Reddemanns incurred a great deal of loss from chronic sewer backups, since they live at Fourth Avenue, which is on an aging sewer line, and has sustained more and more frequent backups.

It's too early for remodeling flood- damaged buildings

The subject moved to other flood-related items, including a moisture meter which is at the city hall, on loan from the extension service.

Residents are urged to borrow the device to determine damage. The device can detect moisture damage in concrete blocks, Sheetrock, and other areas.

Misjudging flood damage ­ and people who are actually beginning to remodel ­ are doing so at risk and will have a huge mess in six months, Mayor Gerry Smith said.

In one case, the Sheetrock looked clean and dry on the outside, and when it was cut away, the entire back of it was covered in black mold, he said.

One person, who thought he had little or no damage, incurred $8,000 in damages because carpeting and the like must be thrown out.

Concrete floors and the like must be sterilized, and thoroughly dried for several days before any kind of remodeling should be considered, commented Council Member John Swanson. Swanson owns a carpeting installation service.

The council turned its attention to the retaining wall at 10 Avenue and Seventh Street owned by David and Mary Hagar, which was built onto the city's right of way.

The wall presents a liability to the city and a potential hazard during the winter, when snow piles atop it and obscures the sightline of other drivers.

Council members discussed the issue at length, with Reddemann asking the council to fix the problem and put the cost on the Hagars' tax base.

City Attorney Chuck Paschke indicated that he hoped the city would find a less expensive solution for the home owners, who couldn't afford it.

The Hagars incurred more loss by the wall's construction, since the driveway had to be dug up as the result of leaking irrigation and they have no hope of recouping loss against the contractor, Paschke said. They have no insurance to cover it, either, he said.

The council decided to see if the maintenance department could help take out the wall altogether and possibly slope the wall for it to be re-seeded, since a retaining wall further back would encroach into the middle of the yard anyway.

School is covered for its damage

The Howard Lake-Waverly-Winsted School Board counted its good fortune last Monday as it approved repairs to the community education room caused by a sewer backup in June ­ with insurance picking up the tab.

This is unlike numerous other Howard Lake residents who either did not have flood insurance, or thought they were covered under the city's insurance policy when it came to sewer backups, which turned out to have exceptions in its policy.

In the past, the board wisely took out extra insurance for such a circumstance, said Superintendent George Ladd.

As a result, an estimated $15,000 to $25,000 of costs will be absorbed by insurance, although the precise figure is not known yet, Ladd said.

The board approved replacement of Sheetrock by Durdahl Construction for $2,400, and carpeting by Lundeen Interiors for $3,050 related to this subject.

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