Water Damage: What's Covered By Insurance?

Water damage insurance is a type of protection provided by most homeowners insurance policies against sudden and accidental water damage. This includes damage from burst pipes, plumbing failures, and toilet problems. However, water damage insurance does not cover damage resulting from negligence or failure to maintain the home, and flooding usually requires a separate policy. Understanding what is considered water damage for insurance is crucial for homeowners to ensure proper coverage and protection.

Burst pipes

Firstly, you should take immediate action to mitigate the damage. This includes shutting off the main water valve to your home to minimise water damage, turning on faucets to reduce pressure downstream, and calling a plumber or water-removal professional for assistance. It is also recommended to contact a water-removal company certified by the Institute of Inspection Cleaning and Restoration Certification (IICRC) to begin cleanup and mitigate damage to walls, floors, and ceilings.

Next, you should contact your insurance provider. They may be able to provide options for water-removal services that they work with, who can respond quickly to any immediate water damage. It is important to document the damage by taking pictures and creating a list of items that need repairs or replacements, including their brand, price, and other details.

Homeowners' insurance typically covers water damage from burst pipes, including repairs to the physical structure of your home and replacement of damaged personal belongings. This includes wood flooring, drywall, and even furniture. The core component of your policy, known as dwelling coverage, helps cover the cost of rebuilding or repairing the physical structure of your home. Property coverage protects your belongings, and you should check if your policy pays for the actual cash value (ACV) or the replacement cost value (RCV). Loss of use coverage is also important, as it can help cover additional living expenses if your home becomes uninhabitable due to the burst pipe.

However, it is important to note that homeowners' insurance usually does not cover the cost of repairing or replacing the burst pipe itself. Additionally, if the damage is due to your negligence, such as failing to maintain your pipes properly or not taking steps to prevent them from freezing, your claim may be denied. Therefore, it is crucial to maintain your pipes and take preventive measures, such as insulating exposed pipes in unheated areas and setting your thermostat to a minimum of 55 degrees Fahrenheit when away from home.

In summary, burst pipes can cause significant water damage, but homeowners' insurance can provide financial protection. By taking prompt action, documenting the damage, and understanding your insurance coverage, you can effectively navigate the claims process and mitigate the impact of this common issue.

Accidental leaks

Homeowners insurance typically covers accidental leaks from plumbing or appliances, such as a broken washing machine or dishwasher. For example, if your washing machine supply hose fails and ruins your flooring, your policy will likely cover the damage to the ceiling and floor. However, it's important to note that most policies won't cover the cost of repairing or replacing the appliance itself.

To ensure coverage in the event of an accidental leak, it's crucial to maintain your home regularly and address any maintenance issues promptly. Insurance companies will want to see that you've taken proper care of your home and that the damage is not a result of neglect.

Additionally, it's important to understand the specific details of your insurance policy, as there may be exclusions or additional coverage options that you should be aware of. For example, water backup coverage can be added to your policy to protect against damage from an outside sewer or drain backup.

Flood damage

Water damage insurance is a type of protection provided in most homeowners insurance policies against sudden and accidental water damage. However, it is important to note that water damage insurance does not cover damage caused by flooding. Flood insurance is typically a separate policy that needs to be purchased in addition to a standard homeowners insurance policy.

Flooding is defined as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area, or of two or more properties (including at least one property that is the policyholder's) due to the overflow of inland or tidal waters, unusual accumulation or runoff of surface waters, or collapse/subsidence of land along a body of water caused by waves or currents exceeding anticipated levels.

Flood insurance is available through the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA) and delivered through a network of insurance companies and agents. The NFIP provides insurance to help reduce the socioeconomic impact of floods, which are the most common natural disaster in the United States.

NFIP flood insurance offers two types of coverage: building coverage and contents coverage. Building coverage includes electrical and plumbing systems, furnaces and water heaters, refrigerators and cooking stoves, permanently installed appliances, cabinets, and flooring, foundation walls and anchorage systems, fuel tanks and pumps, and solar energy equipment. Contents coverage includes personal belongings such as clothing, furniture, and electronic equipment, portable and window air conditioners, valuable items such as artwork and furs (up to a certain value), and carpets not included in building coverage.

It is important to note that there are some exclusions to flood insurance coverage. Temporary housing expenses, property outside of the insured building (such as landscaping, decks, and swimming pools), financial losses due to business interruption, currency and precious metals, vehicles, and personal property kept in basements may not be covered. Additionally, there is typically a 30-day waiting period for an NFIP flood insurance policy to go into effect after purchase.

Gradual damage

Another example of gradual damage is a leaking shower tray. If the sealant around a shower is loose, it can allow water to seep into the floor and ceiling below. As the damage to the ceiling happens over time, it would not be covered under an insurance policy due to the gradual damage exclusion.

Sudden damage, if not acted upon, can sometimes lead to gradual damage. For instance, if a roof is damaged in a storm but the issue is not addressed, water may start leaking into the bedroom upstairs, and the timber framing of the house may become affected by rot. In this case, the storm damage would typically be covered by insurance, but the subsequent damage to the framing would be considered gradual damage and, therefore, would not be covered.

However, it is important to note that some insurance providers offer limited coverage for hidden gradual damage, such as water leaks from internal pipes or waste disposal pipes that the homeowner could not have reasonably seen. This coverage is typically provided as a contribution towards the total cost of the damage, with a maximum payout specified in the policy. For example, AMP's Comprehensive Everyday Plus Home Insurance policy covers hidden gradual physical damage caused by water leakage up to a maximum of $5,000.

Vandalism

In the context of water damage, vandalism could involve tampering with electricity or plumbing, leading to water leaks or flooding. For example, if a vandal turns on all the faucets in a house and clogs the drains, causing water to overflow and damage the property, it would likely be covered by insurance.

However, there are some important limitations to consider. Vandalism losses are typically not covered if a dwelling has been vacant for a certain period, usually 60 consecutive days. Additionally, vandalism committed by any insured individual on the policy is also not covered.

To ensure coverage for vandalism-related water damage, it is essential to review your insurance policy carefully and understand the specific limitations and exclusions.

Frequently asked questions