Understanding Complexities of HVAC Damage After a Hurricane is Crucial for Claims Adjusters

Hurricane-induced damage to properties is a significant concern for residential and commercial structures alike, particularly for heating, ventilation and air conditioning systems.

HVAC systems are essential for maintaining indoor air quality and comfort, and their damage can lead to substantial financial and operational disruptions. For claims adjusters, understanding the complexities of HVAC damage and how to handle these claims efficiently is crucial.

When it comes to HVAC damage caused by hurricanes, split systems are particularly vulnerable because they consist of two separate units, with the condensing unit located outdoors. Additionally, packaged units, which are all-in-one metal cabinets comprising an evaporator coil, condenser, and compressor, mostly used in commercial applications, can also be vulnerable as they are typically located on rooftops or outside structures.

Wind damage can manifest in various ways on HVAC systems. The most evident damage is a condensing unit that has been turned on its side or blown off its pad, potentially causing the whip (an electrical conduit that connects an air conditioning system’s outdoor unit to its indoor unit) and the refrigerant lines to be bent, torn or severed. Severe winds can even blow package units off rooftops.

Additionally, foreign object impact from wind-blown debris can damage the condenser unit’s metal housing, fan blades, fins and coils. Debris can also clog condenser coils, restricting airflow to the unit. Claims adjusters need to assess each component to determine the extent of damage and the necessary repairs to restore the system to its pre-loss condition.

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Regarding water damage, claims adjusters need to ascertain if the damage was caused by a flood since standard policies typically do not cover flood damage but may cover wind-driven rain.

Rising floodwater can infiltrate and damage electrical components in condensing units, rendering systems inoperable. Floodwater can also infiltrate air handlers, furnaces, and ductwork located in crawlspaces. Signs of flood damage include flood lines on condensing units or adjacent structural walls and sagging ductwork in crawlspaces, indicating the presence of floodwater. It is important for adjusters to thoroughly inspect all portions of an HVAC system, including the ductwork, and to take an adequate number of photos to document inspections thoroughly.

The interaction between wind and water damage often complicates the assessment process. For example, a split system’s outdoor condensing unit might show signs of both impact damage from debris and water infiltration. The distinction between floodwater damage and wind-driven rain is crucial for insurance claim purposes. While wind-driven rain damage might be covered under standard homeowners’ insurance policies, flood damage typically requires separate coverage. Claims adjusters must be adept at distinguishing these differences to ensure accurate and fair settlements.

Additionally, saltwater from storm surges can be particularly corrosive to HVAC systems. In coastal areas, the salt content in the floodwater can accelerate the corrosion of metal components, leading to quicker degradation and failure of systems. This necessitates not only immediate repair but also long-term considerations for the resilience and material choices in HVAC systems in hurricane-prone and coastal areas. Adjusters should be aware of these factors when assessing damage and recommending repairs or replacements.

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HVAC losses from hurricanes can range from minor to severe. However, with the high volume of claims following a hurricane, many HVAC losses are paid for full replacement when a repair could have restored the insured property to its pre-loss condition. It is also easy to overlook service provider quotes that are inflated due to upgraded systems or inflated costs. Claims adjusters should carefully review estimates and consider repair options that may be more cost-effective and sufficient to restore functionality.

When it is necessary to replace air conditioning systems, some code upgrades can be missed with older units. The U.S. Department of Energy increased the guidelines for the minimum Seasonal Efficiency Ratio requirements on Jan. 1, 2023. This means if an existing HVAC system has a lower than now required SEER rating, it will be necessary to replace the system with a higher and more energy-efficient SEER based on the DOE requirements. Adjusters should ensure that these upgrades are accounted for in their assessments and recommendations.

Another critical aspect of post-hurricane HVAC damage assessment is the potential for mold growth in the ductwork and other components of the system. Prolonged exposure to moisture can lead to mold and mildew, which not only damages the HVAC system but also poses health risks to the occupants of the building. Therefore, part of the inspection process should include a thorough inspection for any presence of mold. Claims adjusters need to be vigilant in identifying and documenting mold-related damages.

One of the key challenges for claims adjusters in this process is striking the right balance between repair and replacement. Overlooking minor damage can lead to larger issues down the line. For example, if a damaged component is not properly repaired, it could cause additional strain on the system, leading to more significant failures in the future. This not only increases the overall cost of repairs but also poses safety risks to the property owner. On the other hand, prematurely opting for full replacements can be economically inefficient. Replacing an entire HVAC system when only a part needs repair can result in unnecessary expenditure, driving up the cost of the claim and potentially leading to higher premiums for the policyholder. Adjusters must weigh these considerations carefully to make the best decisions for all parties involved.

Moreover, insurance carriers should advise building owners and homeowners on preventive measures to protect their HVAC systems from hurricane damage. This includes securing outdoor units with hurricane straps, installing protective barriers or cages around the units, and regularly maintaining the systems to ensure they are in optimal condition before a storm hits. Elevating HVAC units above potential flood levels and using corrosion-resistant materials can also enhance the systems’ resilience.

The impact of hurricanes on HVAC systems is a complex issue that requires claims adjusters to carefully consider wind and water damage, insurance coverage distinctions, and the potential for long-term issues such as mold growth. By taking proactive measures and conducting thorough assessments, claims adjusters can mitigate the risks and ensure that HVAC systems are restored efficiently and effectively after a hurricane.

Rankin is the CEO of Zap Consulting, a national firm that specializes in insurance claim consulting services for the HVAC, electronics and equipment industries. He has more than 25 years of experience in business leadership and strategic development.