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Homeowners Insurance and Water Damage

Water damage is expensive, difficult to repair, and happens often -- representing a third of all homeowners claims. The average water damage claim costs $10,234 to fix and is the second most common claim on a home insurance policy. Every year, 1 in 50 homes file a water damage claim.

5 Main Types of Water Damage

Insurance providers are very strict about how they classify and cover the various types of water damage. Water damage is often preventable with proper maintenance, so insurance carriers try to limit types of water damage coverage on home insurance policies. Additionally, water damage can lead to mold, which is very expensive to remediate. Mold spores can develop within 24 to 48 hours from unnoticed water damage, so it is best to catch water damage quickly to minimize the damage.

The most prevalent types of water damage are:

  1. Flooding - your standard homeowners policy does not cover flooding, but you can buy a separate flood insurance policy from NFIP or through a private flood company.
  2. Water Damage from a Burst Pipe - your standard homeowners policy covers bursting pipes. If a water pipe leaks slowly, over a long time, your claim can be denied by the insurance adjuster.
  3. Water Backup Coverage - your standard home insurance policy does not include water backup coverage, but you can purchase it as an add-on -- do not confuse Water Backup with Water Overflow.
  4. Storm-Related Water Damage - if water enters your home from above ground level, the water damage is usually covered by your standard homeowners policy.
  5. Water Seepage/Groundwater - your standard homeowners policy excludes coverage for water seeping in through the foundation from standing groundwater. In some states, like Texas, you can add water seepage coverage to your homeowners policy.

1. Flood Damage
FEMA defines a flood as either of the following:

A general and temporary condition of partial or complete inundation of 2 or more acres of normally dry land area OR of 2 or more properties (at least 1 of which is the policyholder's property) from one or more of the following:

  • Overflow of inland or tidal waters
  • Unusual and rapid accumulation or runoff of surface waters from any source
  • Mud-flow

Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

Does homeowners insurance cover flooding?
No. You'll need to purchase additional coverage with a separate flood insurance policy.

2. Water Damage from a Burst Pipe
Water damage from pipes can be either sudden or gradual. Unforeseen and unexpected damage is covered; incremental deterioration over time is not.

Example: Gradual
A leaky pipe under the sink gradually erodes over many  months and starts to leak. You ignore the problem, and water continues to leak out eventually finding a path to the basement and damaging the walls over a matter of weeks.

Example: Sudden
5 PM this Friday you hear a sudden thud in the wall and see the wallpaper suddenly look wet. You run to switch off the house water main and call for a contractor to come over and check out the leak. The pipe burst and he swaps out the piping and replaces the drywall.

Does homeowners insurance cover damage from leaky and broken pipes?
Yes, usually. In most cases, your policy would cover sudden damage. However, if you fail to take reasonable measures to protect your home (keeping it warm in winter to prevent pipes bursting), then you may not be covered. Gradual damage from a slow leak would not be covered because it gets classified as failed maintenance by the homeowner.

3. Water Backup Coverage or Sewer Sump Pump Backup
Damage from sewer and sump pump backups is expensive to repair. When water backup damage happens, the water is typically grey or black water. Black and grey water can carry bacteria, viruses, parasites, chemicals, and other contaminants that further damage a home.

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Expensive sanitation has to happen before repairs can start.

  • Sump Pump Backup - The sump pump either shuts off or becomes clogged. Heavy rains back up and enter the house either on the ground floor or basement.
  • Sewer Backup - Water lines from your sink or toilet are clogged and force water back up into the home.

Does homeowners insurance cover damage from water backup?
Not by default. You'll need to purchase an additional add-on for coverage.

4. Storm-Related Water Damage
Water forced into your home through the roof, walls, windows, etc. constitutes storm-related water damage. Water can also enter your roof through ice melt. Storm-related water damage flows from the outside, top, down, into your home.

Does homeowners insurance cover storm-related water damage?
Yes. Storm damage is a named peril in your homeowners policy, and any damage from it should be covered. Keep in mind that you must take reasonable measures to prevent further damage once you find the source of water.

5. Groundwater or Seepage Damage
Groundwater damage typically classifies water that enters your home at or below ground level. Groundwater can originate from sewage backups and sump pump failures, but another common way is via seepage through the foundations of older homes.

Does homeowners insurance cover groundwater/seepage damage?
No, usually. Many homeowners insurance policies exclude groundwater damage, believing homeowners need to prepare their homes to prevent groundwater damage. If groundwater damage is gradual, it can result in denied claims. Installing a sump pump is one way to avoid damage from groundwater in most homes. In some states, like Texas, you can buy foundation & water coverage as an add-on to cover water leaking in from a compromised foundation.

Now you know how insurance companies look at water damage in your home!

At your service,
Young Alfred