Water damage is one of the most common causes of home insurance claims. According to the Insurance Services Office (ISO), water damage claims are the second largest frequent insurance claim, after wind and hail damage. Claims due to water damage affect 1 in 50 homeowners each year. It's no wonder people have a lot of questions about it. For instance, what is covered under your homeowner's insurance, and why are things such as "gradual damage" not covered?
Things get even more complicated when we look at the exceptions. Here's a review of some water damage claims to show you what kinds of water damage will or will not be covered by home insurance.
Types of Water Damage
There are many types of water damage that a home policy may cover, such as:
- Sudden or accidental discharge
- Sewer backup or water backup
- Storm-related water damage
Common Questions About Water Damage
- Is a water leak covered?
- Is a leaking toilet covered?
- Is water damage from a leaking roof covered?
The answer to whether these are covered or not depends on the source of the damage, the type of policy you have, and whether the water damage is accidental and sudden, or gradual.
Gradual water damage is not usually covered. Check with your broker to be sure.
What Is Gradual Damage?
Gradual damage occurs when something causes damage to your home slowly over time. Gradual water damage is a common problem when it comes to making insurance claims.
For instance, suppose the faucet handles on your sink are leaking and you neglect to repair them. That leaking water will one day cause damage to your home. If you try to make an insurance claim when that happens, you could be denied. Your insurer would see that the problem had been going on for a long time and you didn't make the needed repairs.
Gradual Damage in Your Home
A house is a complex structure. There are wires, pipes, and heating and cooling systems behind the walls and beneath the floors. But we don't see them. We just see the walls, the carpet, and our belongings.
If you don't check and maintain those systems in your home, there could be trouble under the surface. If things go wrong, you might not know until you see the effects of the damage. Often, that's when people try to make a claim.
If the damage is not sudden, but was instead caused by neglect over a long time frame, you'll have trouble getting a claim to pay out.
What Are Examples of Gradual Damage?
Common causes of gradual damage that can cause a claim to be blocked include:
- Plumbing, faucets, or pipes leaking over time, causing damage to walls, ceilings, or floors
- Damage caused by water seeping in from cracks in the basement
- Flashing, tiles, or shingles on the roof that show signs of needed repair
- Mold, rot, or rust
- Old or damaged wires
- Poor repairs or lack of repairs
You might not know why a claim got denied. But if you tried to make a claim and it turns out the damage was caused over time, that's likely why you got denied.
When Is Gradual Damage Covered?
This is where things get tricky. You can figure out what an insurance company will and will not cover based on the wording in the policy. Your agent or broker is the best person to go over the details with you. Ask them to review the exclusions in your policy as well as the type of coverage you have.
All insurance policies exclude wear and tear and gradual damage. But there may be some exceptions.
Examples of Gradual Water Damage Claims
Whether your policy will pay out can depend on its wording. Here are some ideas of when you might see a payout for gradual damage.
In a case where mold results from a covered loss, you may have coverage for fixing the mold issues if you have comprehensive insurance. This is not common. Plus, you'll need to make sure you meet all of the terms of the policy for it to pay out.
Some companies may allow you to buy coverage for fixing mold issues. This varies from state to state. In Texas, for instance, policymakers have pushed to have basic mold coverage added to policies. The best way to find out whether your policy has this is to ask your broker. You might be able to add it, but it will depend on the company.
Tree Causing Roof Damage
Say a tree fell onto a roof, making a hole that let water pour into the home. A water damage claim was made, and the hole and roof were fixed by the insurance company.
Several months later, the owners of the home noticed a funny smell and chipping paint near where the repairs had been done. They called their insurer, who told them to check for dampness or even mold where the damage had been, and they found new water damage.
Because this gradual water damage was a result of a claim that was covered before, the company can decide to cover it.
Broken Pipes and Water Damage
Suppose there is a broken pipe or water tank that gets worse over time, or a washing machine breaks. The actual pipe, tank, or machine will not be covered. However, the resulting damage that occurs after the sudden break may be covered.
Resulting damage is different than the initial damage. For example, if water damage resulting from a broken pipe or appliance is listed in your wording as being covered, then you may be paid for a portion of the damage caused, even though the pipe replacement or new appliance would not be covered. This is an example of the cause of the damage not being covered, but the resulting damage being covered.
Why Claims Are Denied and What To Do About It
First, if you are being denied a claim, make sure that you ask for the full reason. You have every right to understand exactly what part of the policy wording excludes what you are asking for and why the claim is being denied.
Know that there are many people who represent the insurance company during a claim, so you will want to know where the decision is coming from. Was it your agent, the insurance adjuster, or a contractor? Each person plays a different role. Don't be afraid to ask for clarity to avoid misunderstandings. When a claim is denied, you will normally receive word in writing telling you of the official decision.
If you still do not know why something isn't covered, you can see whether there is a chance for a review of your claim. Don't be afraid to ask your agent or representative for a second opinion. In a stressful event such as a claim, things may not be expressed clearly on either side. You will want to make sure you understand fully.
Why Was Coverage Denied?
Find out if coverage would have been available to you for this kind of damage through an endorsement. You have a right to know what is covered (or could be available) on your insurance for the future. You may also want to figure out why you did not have it. If you can get it elsewhere, you can change your insurer.
If you think that your coverage should have applied, or that something is wrong, get a second opinion from a licensed professional or consumer advocacy group that is familiar with insurance in your region.
Avoid Having a Water Damage Claim Denied
Maintain records of repairs and the help you have hired over the years to maintain your home. This will be good to have in the event of a loss. Make sure you know all the coverages on your policy. Have a good understanding of the exclusions as well as your duties as a homeowner.
Perform regular maintenance of your home every spring and fall to avoid surprises. Small repairs made regularly will avoid large expenses.
Make sure you purchase the best insurance for your needs and inquire about extra coverages that may be useful to you.