Not All Water Damage Is Covered By Homeowners Insurance. Here’s What You Need to Know

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Water damage can happen when you least expect it—and depending on the source, it can be expensive to fix.

There are lots of issues that can lead to water damage in your home. There are the obvious ones, like severe weather, floods, and burst pipes. But water damage can also be caused by sneaky leaks, like the condensation that drips out of your air conditioner or a dripping pipe.

Recent data shows that one in 50 insured homes has a water damage claim each year.  When left untreated, water damage can lead to all sorts of major problems, like mold and foundation cracks.

Here are the specifics of when a water damage claim is covered by homeowners policies, when it’s not covered, and the steps to take if you need to file a water damage claim. 

Does Home Insurance Cover Water Damage? 

There are instances in which water damage will be covered by your home insurance and others when it is not. 

Water damage is covered if it is “sudden and accidental, such as if a washing machine supply hose suddenly breaks or a pipe bursts in your home,” according to Quentin Coolen, CEO and co-founder of Waffle Insurance, a national insurance group. 

The caveat is that exclusions and payout limits apply. In general, “homeowners insurance does not cover water damage resulting from poor maintenance of the home,” says Coolen. For example, a neglected issue that occurred years ago and is now causing major problems may go uncovered. 

”Some policies limit the amount of water damage to a home, sometimes to $10,000,” says Jason Pruitt, regional director at Florida-based Altieri Insurance Consultants

Situations when water damage is covered by home insurance:

  • Accidental overflow from appliances, like a toilet or washing machine
  • Water damage from rain or snow
  • Plumbing issues, like burst pipes and frozen pipes
  • Water damage that results from extinguishing a fire
  • Roof leaks that cause water damage inside your home

Situations when water damage is not covered by home insurance:

  • Poor maintenance 
  • General wear and tear
  • Gradual leaks that worsen over time
  • Ground seepage
  • Water backups
  • Sewer pipe backups
  • Flooding

How Much Will My Insurance Cover?

With most home insurance claims, your insurance company inspects the damage and writes you a check for the cost of repairs, minus your deductible. But with water damage claims, it’s not always that simple. The source of the water damage may be covered, but not the secondary losses.

Pro Tip

Home insurance covers certain types of water damage, but not all. Covered claims must be sudden and accidental, which means things like seepage and gradual leaks are excluded.

For example, let’s say that your water heater unexpectedly bursts, causing flooding in your basement. As a result, stored holiday decorations are now damaged by the water. The damaged water heater and pipes will likely be covered because it was sudden and accidental (the two criteria for a covered water damage claim). However, it’s very unlikely that your insurance company will cover replacing the damaged decorations. 

Standard home insurance does not cover flood damage, so unless you had a separate flood insurance policy, replacing the items would be your responsibility.  Flood insurance can be purchased as a separate policy through the National Flood Insurance Program (NFIP).

How Do I File a Claim? 

When it comes to filing a water damage insurance claim, acting quickly is important. Here are the steps you should take to file a water damage claim: 

1. Document all the damages.

Document all of the damages with pictures and videos. Even minor damage should be noted. Document the evidence before you start cleaning up or throwing out damaged personal items. If someone else caused the damage, like a contractor or plumber, get their contact information. Package up the files and be ready to send them over to your insurance company. 

2. Contact your insurance company.

The next step is to contact your homeowner’s insurance company and notify them of the water damage. They will start the claim process, have you fill out paperwork, and match you with a claim adjuster who will oversee your claim, review the damage in person, and recommend your final payout. 

3. Meet with a claims adjuster.

If you’re dealing with severe water damage, a claim adjuster will likely visit your home to evaluate the damage in person to assess the extent of the damage, how it happened, and estimate the cost to fix. 

You can also hire your own public claims adjuster to get a second, and potentially less biased, opinion. “I recommend always hiring a licensed public adjuster to handle your insurance claim,” says Pruitt. “They are licensed through the state and handle all aspects of your claim from start to settlement.”

For a comprehensive list of licensed public claims adjusters, you can check the National Association of Public Insurance Adjusters (NAPIA)

4. Prevent further damage and secure surviving valuables. 

Don’t hire a contractor or spend thousands of dollars on major fixes, but do what you can to prevent further damage. For example, turn off the main water line to stop the water from flowing, make temporary or minor repairs to help stop the damage from continuing, or move stored items to a safe place. If you purchase anything, keep your receipts to include in your claim.  

What to Do If Your Claim Is Denied

Even if you think you have a valid water damage claim, it’s possible that your claim could get denied. If this happens, you have the option to appeal the outcome and renegotiate.

“You always have the opportunity to escalate a case if your water damage claim is denied,” according to Coolen. This is where good record-keeping will come in handy. If you want to appeal your claim, you’ll need to have detailed documentation that clearly shows that the damage is, in fact, covered by your policy.

“With your resubmission, consider adding new evidence of the water damage such as an independent appraisal, and hire an attorney to help support your case,” adds Coolen. Keep in mind, though, the overall cost of paying for additional services could add up and eventually outweigh the reimbursement amount denied from the insurance company, Coolen says. 

This is another situation where working with a public adjuster can come in handy. “Public adjusters are the only entity other than attorneys who have the authority to negotiate with insurance companies to correctly settle your claim,” says Pruitt. 

Will Rates Increase After a Water Damage Claim?

After a water damage claim, you should expect your home insurance premium to increase, even if it’s your first one. Having a claim on your record means that you are riskier to insure, and there’s a greater likelihood that you will file another claim at some point in the future.

You might not be able to avoid the rate hike, but there are ways to lower your premium after a water damage claim. First, make sure you are taking advantage of every discount you qualify for. You can also consider paying your annual premium in full, raising your deductible, and even switching insurance companies.