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Category 3 Water Damage from Roof Leaks

The New Restoration Money Grab


I want to be clear that the restoration industry is dedicated to quickly responding to those in need during some of the most difficult times.  These trained professionals are on call 24 hours a day and have the equipment and training to restore any property to its pre-loss condition.  However, there are those that look at a loss as little more than an opportunity to make money with little or no consideration for the property owner.


These are the restoration contractors who are misclassifying water damage from roof leaks.  This is advantageous to restoration contractors but not to the property owners.  In today’s restoration of roof leaks, the roofers refer a restoration contractor to any observed ceiling stains.  The restoration contractor then recommends an IEP, Indoor Environmental Professional, to evaluate the water stain to determine the best approach to the restoration of the ceiling stain.  Keep in mind that in virtually every case, the stains have long since been dry and have had no negative impact on the occupants either in odor or health.  The stains were simply a visual issue that the property owner intended to correct with paint.


This is where it obviously becomes over complicated.  The restoration contractor will restore the ceiling stain based on the IEP’s recommendations, which far too often involves the containment and removal of the ceiling stain because the stain is reported as Category 3 water; therefore, an exposure risk to the occupants.  The IICRC (Institute of Inspection Cleaning and Restoration Certification) S500 Standard and Reference Guide for Professional Water Damage Restoration defines Category 3 water as grossly contaminated and can contain pathogenic, toxigenic, or other harmful agents and can cause significant adverse reactions to humans if contacted or consumed. 


The most specific aspect of Category 3 water is that it can cause significant adverse reactions to humans if contacted or consumed.  Without confirmation of the contamination we’ll never know the true category of the water.


Regardless, this theoretical exposure risk is explained to the property owner who becomes convinced that they should allow the IEP and restoration contractor to help them with the stain.  Of course, the IEP and restoration contractor explain to the homeowner that it will be a covered loss and that they will help them by handling the claim and invoicing with the insurance company via the AOB (assignment of benefits). Neither the IEP nor the restoration contractor can ensure coverage.


I can assure you that we’ve had ceiling leaks for as long as we’ve lived in shelters and until recently, we’ve never declared a ceiling stain grossly contaminated and a health risk to occupants.  I can’t imagine how the ceiling stain would pose an exposure risk to the occupants unless they licked the ceiling.


The problem is that these IEP’s, roofers, and restoration contractors have identified a new untapped revenue stream.  The roofers report the ceiling stains to the restoration contractors for a small cash referral fee, avoid the “M” word (mold) by using an IEP to declare the stain as Category 3, and pursue the ceiling stains as restoration of water damage.  With a signed AOB, the IEP and restoration contractor invoice the insurance company for the assessment and water damage restoration.


Bear in mind that this is not the typical approach to any small water damage or ceiling stain.  An active water leak, maybe.  But a small ceiling stain, not hardly. 


By enlisting a willing IEP, the restoration contractor can easily state that he or she is only following the IEP’s recommendations.  The work was preformed and the AOB signed.  The restoration contractor will then use one of the many restoration law firms to sue the insurance company for payment if the insurance company declines the loss.  In most cases, the property owner is unaware of the litigation involving the work performed in their property.


Unfortunately, the way the AOB laws are written, the restoration attorney would not have to pay the insurance companies legal fees if they lose the case.  However, the “one-way attorney fee statute” requires insurance companies to pay legal fees against any named “or omnibus insured” who wins a court judgment or decree in an action against the insurer.


Courts interpret “omnibus insured” as meaning any assignee of the insured, and in cases against property insurers, that usually means water restoration contractors.  Armed with the AOB, the contractors and their attorneys started realizing that huge money could be made challenging claims denials or settlement offers.  This has led to the boom on category 3 ceiling stain restoration.


To get back to the unnecessary restoration of a ceiling stain, we need to review how the classification of water is established.  The classification of water damage is defined by the IICRC S500 Standard and Reference Guide for Professional Water Damage Restoration which sets the standards for the cleaning industry and water damage restoration as either Category 1, 2, or 3.


According to the IICRC’s S-500 standard there are three categories describing the type of liquid involved in a water loss. These three categories refer to the degree of contamination involved.


From the IICRC website http://www.iicrc.org/the-basics-water-damage-restoration-training-a-23.html


Category 1. This is liquid from a clean and sanitary source, such as faucets, toilet tanks, drinking fountains, etc. But, category one can quickly degrade into category two.


Category 2. This category of liquid used to be called grey water and is described as having a level of contaminates that may cause illness or discomfort if ingested. Sources include dishwasher or washing machine overflows, flush from sink drains, and toilet overflow with some urine but not feces.


Category 3. This is the worst classification and is grossly unsanitary. It could cause severe illness or death if ingested. It used to be called black water and sources include sewer backup, flooding from rivers or streams, toilet overflow with feces, and stagnant liquid that has begun to support bacterial growth.


So how could the classification of water be so abused?  It’s all in the IICRC Category 3 definition.  It’s a wording issue.  As you read below, the definition clearly states that Category 3 water can include but are not limited to several various sources.  That doesn’t mean that all are Category 3, or that Category 3 water is limited to that list.  It simply means that all water could be Category 3 under the right circumstances.  To establish the presence of Category 3 water, samples of the suspected area would need to be collected.  The method used could either be by culturing a sample for bacteria or with the use of ATP.  Either way, the presence of Category 3 water would need to be confirmed.


The IICRC Definition of Category 3 Water IICRC S500 2015 page 14


Category 3 water is grossly contaminated and can contain pathogenic, toxigenic, or other harmful agents and can cause significant adverse reactions to humans if contacted or consumed. Examples of Category 3 water can include, but are not limited to: sewage; waste line backflows that originate from beyond the trap regardless of visible content or color; all other forms of contaminated water resulting from flooding from seawater; rising water from rivers or streams; and other contaminated water entering or affecting the indoor environment, such as wind driven rain from hurricanes, tropical storms, or other weather related events if they carry trace levels of contaminants (e.g., pesticides or toxic  organic substances).


The critical aspect of category 3 water is that it can cause significant adverse reactions to humans if contacted or consumed.


The IICRC Definition of Category 2 Water S500 2015 page 14


“Category 2: Category 2 water contains significant contamination and has the potential to cause discomfort or sickness if contacted or consumed by humans.  Category 2 water can contain potentially unsafe levels of microorganisms or nutrients for microorganisms, as well as other organic or inorganic matter (chemical or biological). Examples of category 2 water can include but are not limited to: discharge from dishwashers or washing machines; overflows from washing machines; overflows from toilet bowls on the room side of the trap with some urine but no feces; seepage due to hydrostatic pressure; broken aquariums and punctured water beds.


The critical aspect of category 2 water is that it has the potential to cause discomfort or sickness if contacted or consumed by humans.  Category 2 water can contain potentially unsafe levels of microorganisms or nutrients for microorganisms. 


The IICRC Definition of Category 1 Water S500 2015 page 13


“Category 1: Category 1 water originates from a sanitary water source and does not pose substantial risk from dermal, ingestion, or inhalation exposure.  


Examples of Category 1 water sources can include but are not limited to: broken water supply lines; tub or sink overflows with no contaminants; appliance malfunctions involving water-supply lines; melting ice or snow; falling rainwater; broken toilet tanks, and toilet bowls that do not contain contaminants or additives.”


The critical aspect of category 1 water is that it does not pose substantial risk from dermal, ingestion, or inhalation exposure.


It’s important to remember that category 3 water is NOT potable water.  Potable water, is water that is safe to drink or to use for food preparation.  You cannot use category 3 water as a drinking source or to prepare your food.  Category 1 water may have come from a potable source but can change to category 2 or 3 once it contacts other surfaces.


So how do these guys creatively categorize the water stain as category 3?  They use a combination of source and duration.  They believe that the water as it passes through the insulation and drywall becomes category 3.  If that argument meets with resistance, then they use the duration of loss as altering the category from 1 to 3.


The rain itself isn’t Category 3.  Rainwater is predominantly evaporated water from a variety of sources such as lakes, rivers, and oceans.  According to IICRC S500, atmospheric rainwater is defined as Category 1.  We discussed that previously, falling rainwater is listed as an example of category 1 water.


Below are ways that the category of water can deteriorate according to the IICRC.


S500 2015 page 13

“Category 1 water can deteriorate to Category 2 or 3.  Category 1 water that flows into an uncontaminated building does not constitute an immediate change in the category.” “However, Category 1 water that flows into a contaminated building can constitute an immediate change in the category.”


S500 2015 page 13

Category 2 water can deteriorate to Category 3. Once microorganisms become wet from the water intrusion, depending upon the length of time that they remain wet and the temperature, they can begin to grow in numbers and can change the category of the water.”


According to the IICRC, the category can change.  It doesn’t say that it will change.  These roof leaks can be very short lived and may not deteriorate in category and may not need containment or removal. That’s the value in an IEP, and unbiased opinion of the category of water supported by sampling and the explanation of occupant risk to the water damage.


The opportunistic restoration contractors are claiming that the water is automatically Category 3 or the length of time that the Category 1 or 2 affected building materials remained wet and deteriorated the Category 1 or 2 water to Category 3.  This is ridiculous and only benefits the restoration contractor.  Property owners should base the need for removing a ceiling stain on exposure risk and cost, not policy coverage.  A few years ago, nobody would consider making a hole in their ceiling because they had a small stain from a roof leak.  Let’s face it nobody wants a nasty repair in the middle of their living room ceiling.  But today many restoration contractors are convincing property owners that they need extensive restoration to their homes because of the risk of exposure to category 3 water.


Let’s explore the occupant risk to the different categories of water damage and the possible need for removal of water damage stains.


Option 1

1.    The roof leak began as water that does not pose substantial risk from dermal, ingestion, or inhalation exposure. No need for extensive restoration.  The area is dry and out of reach.

Category 1, examples include: broken water supply lines; tub or sink overflows with no contaminants; appliance malfunctions involving water-supply lines; melting ice or snow; falling rainwater; broken toilet tanks, and toilet bowls that do not contain contaminants or additives.


Option 2

2.    The roof leak deteriorated to water that has the potential to cause discomfort or sickness if contacted or consumed by humans.  No need for extensive restoration.  The area is dry and out of reach.

Category 2, examples include: discharge from dishwashers or washing machines; overflows from washing machines; overflows from toilet bowls on the room side of the trap with some urine but no feces; seepage due to hydrostatic pressure; broken aquariums and punctured water beds.


Option 3

3.    The roof leak then deteriorated to water that can cause significant adverse reactions to humans if contacted or consumed.  No need for extensive restoration.  The area is dry and out of reach.

Category 3, examples include: sewage; waste line backflows that originate from beyond the trap regardless of visible content or color; all other forms of contaminated water resulting from flooding from seawater; rising water from rivers or streams; and other contaminated water entering or affecting the indoor environment, such as wind driven rain from hurricanes, tropical storms, or other weather related events if they carry trace levels of contaminants (e.g., pesticides or toxic  organic substances).


Unless the ceiling is compromised and/or there is visible mold on the ceiling there is no need for extensive restoration.  The area is dry and out of reach therefore not an exposure risk to the occupants.


Clearly Option 1 or 2 are the typical classifications of a ceiling stain resulting from a roof leak.  Some would argue Option 2.  However, neither would require containment and removal due to the risk of occupant exposure.  I think anyone reasonable would conclude that a simple ceiling stain from a short-term roof leak would not cause a significant adverse reaction to humans if contacted or consumed because the water has long since dried and the area out of reach.  Remember the ceiling stains that we’ve been called in to assess were all dry and posed absolutely no exposure risk to the occupants.  Could it be category 3, yes.  But does it need to be removed for the safety of the occupants, usually not.  Unless the ceiling is compromised and/or there is visible mold there is no need for extensive restoration.  The area is dry and out of reach therefore not an exposure risk to the occupants.


Any area of water damage can deteriorate to category 3.  The S500 provides examples of that.  According to the S500 reference guide the restoration contractor is responsible for categorizing the water.  If retained, the IEP has the responsibility to confirm the category of water before they recommend substantial restoration of a ceiling stain.  Can a roof leak be category 3?  Sure, but you better confirm before you begin removing a simple stain in any home I’m involved with as an IEP. 


The restoration contractor’s objective is to profess occupant risk to the category 3 water stain that would lead the property owner to initiate an insurance claim.  The categorization of roof leaks as category 3 to suggest that the stained area would cause a significant adverse reaction to humans if contacted or consumed is simply being used to gain access to yet another home for yet another claim and another invoice.


Please share this with your friends and family.  We do not need this level of unnecessary water damage restoration just because the system is set in a way that would allow leveraging payment for the unnecessary restoration.


Stay safe and informed my friends.




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