Homeowners Insurance and Water Damage

Water damage is one of the most common reasons for homeowners to file insurance claims. Water damage claims are the second most common insurance claim, after wind and hail damage, according to the Insurance Services Office (ISO). Every year, one in every fifty homeowners faces a claim for water damage. It's no surprise that people have many questions about it. For example, what is covered by your homeowner's insurance, and why is "gradual damage" not covered?

When you consider the exceptions, things become even more complicated. Here's a look at some water damage claims to see what types of water damage are and aren't covered by homeowners insurance.

Common Questions About Water Damage

People frequently have questions about what their home, condo, or renter insurance will cover. As an example:

• Is water damage covered?
• Is a leaking toilet included?
• Is a leaking roof's water damage covered?

The answer depends on the source of the damage, the type of policy you have, and whether the water damage is accidental and sudden or gradual.

Covered

• Damage from a sudden plumbing leak
• Appliance overflows
• Water damage caused by weather (but not from floods)

Not Covered

• Water back-up from an outside sewer drain
• Flooding
• Poor maintenance results in damage.

What Is Gradual Water Damage?

Gradual damage occurs when something gradually causes damage to your home over time.

For example, suppose your sink's faucet handles are leaking and you fail to repair them. That leaking water could cause damage to your home one day. If you try to file an insurance claim during this time, you may be denied. Your insurer would notice that the problem had been present for a long time and that you had failed to make the necessary repairs.

Gradual Damage in Your Home

A house is an intricate structure. Behind the walls and beneath the floors are wires, pipes, and heating and cooling systems. However, we do not see them. We only see the walls, the carpet, and our possessions.

If you don't check and maintain your home's systems, there could be problems lurking beneath the surface. If something goes wrong, you may not realize it until the damage is visible. That is frequently when people attempt to make a claim.

Examples of Gradual Damage

Common causes of gradual damage that can result in a claim being denied include:

• Over time, plumbing, faucets, or pipes leak, causing damage to walls, ceilings, or floors.
• Water seeping in through basement cracks causes damage.
• Roof flashing, tiles, or shingles that show signs of wear and tear
• Mold, rot, or rust
• Wires that are old or damaged
• Poor or non-existent repairs

You might not understand why a claim was denied. However, if you attempted to file a claim and it turned out that the damage was caused over time, you were most likely denied.

When Gradual Damage Might Be Covered

This is where things get complicated. Based on the policy language, you can determine what an insurance company will and will not cover. The best person to go over the details with you is your agent or broker. Request that they review your policy's exclusions as well as the type of coverage you have.

Wear and tear and gradual damage are not covered by any insurance policies. However, there may be some exceptions. The wording of your policy may determine whether or not it will pay out. Here are some scenarios in which you might receive a payout for gradual damage.

Mold Issues

If mold is caused by a covered loss, you may have coverage to repair the mold if you have comprehensive insurance. This is unusual. In addition, you must follow all of the policy's terms in order for it to pay out.

Some companies may allow you to purchase mold insurance. This differs from one state to the next. In Texas, for example, policymakers have pushed for basic mold coverage to be included in policies. Inquire with your broker to see if this is included in your policy. You might be able to incorporate it, but it will be dependent on the company.

Tree Causing Roof Damage

Assume a tree fell on your roof, creating a hole that allowed water to enter your home. The insurance company repaired the hole and roof after a water damage claim was filed.

Several months later, the home's owners noticed a strange odor and chipping paint near where the repairs had been made. They contacted their insurer, who advised them to look for dampness or even mold where the damage had occurred, and they discovered new water damage.

Because this gradual water damage was caused by a previous claim, the company may decide to cover it.

Broken Pipes and Water Damage

Consider a broken pipe or water tank that worsens over time, or a washing machine that fails. The pipe, tank, or machine itself will not be covered. However, the damage caused by the unexpected break may be covered.

The resulting damage differs from the initial damage. For example, if water damage caused by a broken pipe or appliance is listed as covered in your wording, you may be paid for a portion of the damage caused, even if the pipe replacement or new appliance is not covered. This is an example of where the cause of the damage is not covered but the resulting damage is.

Why Claims Are Denied and What To Do About It

First, if you are denied a claim, make sure you get the full reason. You have every right to know what part of the policy language excludes what you're requesting and why your claim was denied.

If you still don't understand why something isn't covered, you can see if your claim can be reviewed. Don't be afraid to seek a second opinion from your agent or representative. Things may not be expressed clearly on either side during a stressful event such as a claim. You should double-check your understanding.

Why Was Coverage Denied?

Determine whether you would have had coverage for this type of damage through an endorsement. You have the right to know what is (or could be) covered by your insurance in the future. You should also investigate why you didn't have it. If you can get it elsewhere, you can switch insurers.

If you believe your coverage should have applied or that something is incorrect, seek a second opinion from a licensed professional or consumer advocacy group familiar with insurance in your area.

Your insurance company may also have an ombudsman who can assist you in reviewing your file. You can also seek advice or file a complaint with your state's insurance commissioner.

Keep track of repairs and the people you've hired to help you maintain your home over the years. This will be useful in the event of a loss. Make sure you understand all of your policy's coverages. Understand the exclusions as well as your responsibilities as a homeowner.

To avoid surprises, perform regular maintenance on your home every spring and fall. Small repairs done on a regular basis will save you money in the long run.

Make sure you get the best insurance for your needs and inquire about any additional coverages that may be beneficial to you.