What Is Water Damage Insurance?
Let me explain water damage insurance to you directly: it's a form of protection in most homeowners insurance policies that covers sudden and accidental water damage. You need to know it doesn't cover damage from your own negligence or failure to keep your home in good repair. Also, flooding typically requires a separate policy if it's available at all.
Understanding Water Damage Insurance
In most home insurance policies, you'll find coverage for accidental and sudden water damage. For instance, if a pipe bursts and damages your wall or floor, that's covered. But if there's a gradual leak or seepage because you didn't maintain things properly, forget it—that's not covered. Water damage insurance absolutely does not cover negligence.
If you have a mortgage, your lender will require homeowners insurance, but they probably won't specifically demand water damage coverage. You should focus on proper maintenance to avoid many types of water damage. This means watching for drips from the ceiling during rain or fixing a leaky pipe under the sink before mold sets in.
Water Damage Claims and Costs
Water damage plays a big role in homeowners insurance claims. According to the Insurance Information Institute, from 2017 to 2021, water was the third-leading cause of claims, averaging $12,514 per claim. Water damage and freezing ranked second in frequency after wind and hail. About one in 60 insured homes files a property damage claim due to water or freezing each year. In 2021, water damage made up over 23% of claims, following wind and hail at 39% and fire and lightning at 25%.
Warning on Policy Sublimits
You must carefully review your policy for sublimits that cut back on water damage coverage. For example, your policy might offer $300,000 in property damage but cap water damage at $8,000. These sublimits can lower your premiums, but they'll hike your out-of-pocket costs when you file a claim.
Types of Water Damage Claims
One of the most common claims comes from plumbing system failures. Frozen pipes can burst due to pressure from freezing water nearby. Broken valves or weakened joints also lead to failures in the plumbing supply system.
Drain system failures, including sewer backups, are another major source. Toilet failures—from the supply line or backups into the house—can cause serious damage. Standard policies might not cover sewer backups, so you may need an additional rider. Other claims often involve failing water heaters or washing machine hoses.
Special Considerations
To reduce water damage risks, get older homes inspected by a licensed plumber every five years. Replace old water heaters, use steel-braided supply lines on washing machines, and turn off the supply lines when not in use. Avoid running the dishwasher or washing machine when no one's home.
Frequently Asked Questions
What types of water damage are covered under homeowners insurance? Most policies won't cover seepage or gradual leaks. Instead, sudden and accidental events are likely covered.
Does homeowners insurance cover water leaks and backups? It depends on the policy—some cover sewer backups, especially from covered events like burst pipes or storms. You might need an add-on for water or sewer backup coverage.
What's the difference between actual cash value and replacement cost? Actual cash value deducts for depreciation, so you get less for worn items. Replacement cost pays for items at current prices without depreciation.
The Bottom Line
Water damage insurance covers certain forms of water damage for homeowners. Most policies exclude damage from negligence, poor maintenance, or floods. If it's a sudden, accidental event, like a burst pipe or toilet failure, your insurance will likely cover the home damage.
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