What Is a Water Exclusion Clause?
Let me explain what a water exclusion clause is—it's a restriction you'll find in homeowners and renters insurance policies that denies coverage for certain water-related claims. This includes damage from floods, tsunamis, standing water, groundwater, and drain or sewage backups.
If you're a homeowner or renter, you might be able to add coverage for some of these excluded water damages by buying a rider or a separate, specialized insurance policy.
Key Takeaways
- A water exclusion clause is a standard feature of property insurance contracts, denying coverage of various categories of loss associated with aquatic events.
- Typically, water exclusion clauses include floods due to external causes; sewage or water main failure/backups; tsunamis; standing or groundwater.
- Homeowners policies typically do protect against water damage from a sudden mishap inside the home, like a burst pipe or overflowing toilet.
- Separate flood insurance furnishes coverage against flooding.
Understanding a Water Exclusion Clause
You'll see a water exclusion clause in most property insurance policies, and the reasoning is straightforward: only specific areas are prone to water-related natural disasters like floods, tidal waves, or tsunamis. This is one of several exclusion clauses in homeowners and renters insurance, alongside things like earth movements such as earthquakes or landslides, wars, certain government actions, and nuclear hazards.
That said, water-related perils aren't completely excluded from homeowners insurance. Most policies do cover water damage from specific reasons, usually sudden or accidental events inside the structure, like a burst pipe or a malfunctioning dishwasher or other plumbing issues. Gradual damage or wear and tear over time generally isn't covered.
Damage from certain weather events—like a thunderstorm that sends a tree crashing through a wall, or snow collapsing a roof and letting water in—is generally covered, at least for the water damage part; the repair of the wall or roof itself might not be. Some hurricane-related damage may also be covered, but in 19 states and the District of Columbia, you have to pay an additional hurricane deductible before coverage starts.
Special Considerations: Floods and Water Exclusion Clauses
Unless it's from an internal cause like a gushing washer or overflowing toilet, flooding is typically part of a water exclusion clause. These clauses define a flood as rising or surface waters coming from outside, but this can lead to controversy and litigation— for example, does it apply if the flood is from man-made causes like a burst dam, or only natural ones like overflowing rivers? Does surface water include water on pavement or roofs?
Despite the debates, the key point is that a flood from an external source seeping into your home probably won't be covered by the hazard insurance in a standard homeowners policy. Water damage is expensive and common—in 2018, it represented 23.8% of all insurance losses, with average losses to homeowners at $10,849 according to the Insurance Information Institute—which is why you should consider alternative coverage.
Usually, that means buying a separate flood insurance policy. For properties in high-risk areas, lenders often require mortgaged homeowners to carry flood insurance to protect the dwelling's structure. Unlike standard policies, flood insurance requires separate policies for the property and its contents. If your home is financed by a federally backed lender and in a designated flood hazard zone, flood insurance is mandatory.
Flood insurance is available for residential and commercial properties, and renters can get policies covering personal property in homes, apartments, condos, or businesses. You can buy it through many insurance companies, but rates are regulated by the federal National Flood Insurance Program (NFIP), so the cost is the same no matter where you purchase it.
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