Damaging water leaks are one of the most frequent and severe issues homeowners face, at ~30% of total and $9.1B in the US alone. Currently, water damage claims are the second most common insurance claim filed among policy holders.
Many people lack an understanding of the intricacies of their insurance policy when it comes to water damage claims. This article will detail a general overview of how insurance companies view water damage claims, but it is important to review your individual homeowner's policy as well, as details may vary.
Water Damage Coverage
The first question a homeowner typically asks is, "Does my insurance company cover water damage?".
Most insurance companies decide whether to cover water damage or not based on the source of the damage. Insurance companies tend to classify the source into one of three categories:
Insurance companies tend to cover water damage that is sudden and accidental, but tend NOT to cover water damage that is gradual.
Sudden & Accidental
Typically, your insurance company defines sudden and accidental as an event that was unexpected, and not caused by something the homeowner did. For example, if a homeowner attempts to repair a toilet and during the course of the repair the toilet starts leaking, it would not be considered accidental. Additionally, if a leak has been happening for a couple of days and just began to worsen, it would not be considered sudden.
On the other hand, events that are considered sudden and accidental that your insurance company will probably cover include the following:
- Burst, faulty or frozen pipes and plumbing
- Accidental overflow of an appliance (ex. toilet, washing machine, bathtub)
- Water damage from extinguishing a fire
Even if you have insurance for water damage, often times gradual water damage is not part of that coverage. Gradual water damage refers to damage that happens over the course of time, and can usually be stopped before it worsens. Examples of gradual water damage include the following:
- Plumbing, faucets or pipes leaking over time causing damage to walls, ceilings, and floors
- Cracks in the foundation or exterior of your house that allow water to enter your home
- Mold, rot or corrosion
Homeowner's are often left with confusion when their water damage claim gets denied because the damage was gradual. Often times, gradual water damage may have suddenly appeared to the homeowner, but in reality is the result of something that has been ongoing for a while.
It is important to note that while generally all insurance policies exclude coverage for gradual damage and wear and tear, there may be some exceptions. For this reason, it is important to check with your insurance agent to review the wording of your specific policy.
It is important to distinguish between water damage and a flood when filing a claim with your insurance company. Often times, sudden and accidental water damage is covered under a homeowner's policy, but flood insurance is not. The easiest way to determine if damage is classified as water damage or as a flood is based on where the water that caused the damage is coming from.
If the water that damaged your home comes from a natural source, the damage is considered a flood. This means that any damage caused by this naturally sourced water would not be covered under your homeowner's insurance policy, but rather under a flood insurance policy. Typically, homeowner's must purchase flood insurance as a supplement to their general insurance policy.
While a general distinction between general water damage and a flood is given here, be sure to contact your insurance agent for a more robust definition specifically pertaining to your policy.
Avoid a Claim Denial
As explained, there are numerous reasons for your water damage claim to be denied. Here are some tips to avoid that happening:
- Maintain records of self repairs and professionals you've hired to do maintenance
- Understand all coverages of your policy, as well as all exclusions
- Regular maintenance of your home every spring and fall to check for possible leaks
- Install a Water Hero!
Water Hero: Avoiding Water Damage
By installing a Water Hero in your home, small leaks can be detected before they worsen over time. When water flow is irregular, Water Hero uses internet-based technology to send an alert to your phone or computer. This will allow you to either manually turn the water off in your home using the application, or will automatically shut your water off if extremely irregular flow is detected. The application allows a user to preset thresholds, as Water Hero understands that "irregular" water flow amounts mean something different to every household. To learn more about Water Hero, please visit our website.
To learn more about what to do when you have a water leak, besides dealing with your insurance company, check out a previous post on our blog!