The Roof Drain, the Silent Contract, and the 72-Hour Clock
A storm backs up a roof drain and water enters 14 of 96 apartments in a property you manage. The drain was 'cleared' six weeks ago by the landscaping vendor under a $1,200/month grounds contract that says nothing about drainage and carries no insurance or indemnity requirement. Your policy has a $25,000 per-occurrence deductible and excludes mold unless remediation begins within 72 hours. Three residents are in a hotel at $139/night; one claims a laptop and a rug were damaged. The owner is unreachable on a trip. Your authority is $10,000 without approval, and the carrier requires notice within five days. Mold remediation, if it happens, runs $30,000-$60,000.
1. What do you do in the first 24 hours, in order, and what do you document?
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Order matters because the 72-hour mold clock is running:
- Stop the water and make safe. Divert or tarp the drain, shut off any wet electrical, and confirm no slip hazard in common areas.
- Call the restoration vendor under the existing MSA now, not tomorrow. Extraction and drying equipment set within 72 hours is what preserves coverage; the $30,000-$60,000 mold number is the cost of missing that window. Spending above your $10,000 authority on emergency mitigation is defensible and expected; document why.
- Habitability and residents. Inspect all 14 units and the 11 adjacent ones. Relocate anyone whose unit is unusable, in writing, with the hotel terms confirmed. Do not discuss fault or coverage with residents; give them a claim contact and a timeline.
- Notify. Call the owner's emergency contact, email the broker and carrier to start the claim (well inside five days), and put the vendor on written notice of a potential claim without admitting anything.
- Preserve evidence before anything is cleaned: photographs of the drain, the water line, moisture readings by unit, the vendor's six-week-old work ticket, and the grounds contract.
Document: date/time log, photos, moisture readings, vendor invoices, every resident communication, relocation costs, and the notice dates to the carrier.
2. Who bears the cost - the insurer, the vendor, or the owner? Analyze the contract gap and the realistic recovery.
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Owner's policy: responds to sudden and accidental water damage, subject to the $25,000 deductible. The mold exclusion is the pivotal issue - because mitigation started inside 72 hours, mold should be treated as part of the water loss rather than excluded, though a sublimit may still apply. Immediate mitigation is therefore a coverage decision, not just an operations decision.
Vendor: the contract is silent on drainage and requires no insurance, additional-insured status, or indemnity. That silence cuts both ways. There is no express contractual duty to clear drains, so a contract claim is weak; a negligence claim requires showing that 'grounds maintenance' reasonably included drain clearing, that the work was done improperly, and that the failure caused the loss. Recovery is uncertain, slow, and probably smaller than the relationship damage. Tender it to the vendor anyway in writing to preserve rights and start their insurer's clock.
Owner bears: the $25,000 deductible, any mold sublimit gap, and uninsured betterments. The laptop and rug are primarily the resident's renter's insurance; the owner is exposed only if negligence is shown.
Rough exposure: $25,000 deductible + relocation (3 x $139 x ~14 nights = ~$5,800) + drying, drywall, flooring and repairs. If mold is covered, the total might be $60,000-$90,000, of which the owner pays the deductible and any sublimit. If coverage is denied, the owner pays all of it - which is exactly why the 72-hour response was worth more than any recovery argument.
3. What do you change in the risk management program at renewal, and how do you quantify the exposure to justify the spend?
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Contract and vendor controls:
- Rewrite the grounds scope to include quarterly roof drain and scupper clearing, with a signed service log. Either add drainage to this contract or move it to a roofing vendor.
- Require $1M/$2M general liability, additional-insured status, waiver of subrogation, and 30-day cancellation notice on every service contract, including the $1,200/month one. The absence of these terms is the actual finding here, not the drain.
- Standing restoration MSA with a four-hour response commitment.
Insurance and operations:
- At renewal, review the mold sublimit and consider buying it up; compare the premium against the $30,000-$60,000 per-event mold cost.
- Add roof drains to the preventive maintenance schedule and to the pre-storm inspection checklist.
- Add a one-page water intrusion protocol to the site manual so a after-hours call follows the same 72-hour sequence.
Quantify it: two uninsured water events a year at $50,000 each is $100,000 of exposure against a drain PM contract of perhaps $6,000/yr and an insurance endorsement of a few thousand. That comparison, plus the 72-hour coverage condition, is the business case. Present it to the owner at renewal alongside the loss run, not as a complaint about the vendor.