Let’s be honest, Iowa weather is normally unpredictable, but in the spring, it gets a little extra. Storms seem to appear out of nowhere, as does the potential for flooding basements, wind damage and hail. Let’s not even talk about Derechos. Thank goodness for Homeowner’s insurance, right?
Well…when was the last time you spent a quiet Saturday afternoon reading through the details of your Homeowner’s water coverage? We’re talking about everything from definitions to exclusions a) b) and c). We’ll go ahead and say here, loudly and with purpose, that insurance claims for water and other damage can be downright confusing, to put it mildly.
It may not be the most exciting blog topic of all times, but it’s an important one, so please stick with us. The point of sharing this tale of obscurity is: You really need to understand what your current policy covers so that you can be sure to have the right insurance solutions for your individual needs.
Understanding Your Homeowner’s Insurance Water Coverage*
While it’s spring right now, and storms are a plenty, water damage obviously isn’t limited to heavy rainfall and storm-related flooding. We’ve seen everything from a frozen outdoor faucet that leaked into a basement, a sewer backup in a camper (we’ll spare you the details) and a dishwasher malfunction that leaked from the top floor to the basement on New Year’s Eve. That couple didn’t ring in the New Year with joy.
The point is, Homeowner’s insurance, and the coverage for water damage you may have, can vary significantly based on many factors. Some policies exclude certain types of water losses, and others may cover them. Additionally, some carriers allow excluded coverages to be purchased back by endorsement, and others don’t. Fun times!
Here, we’re going to walk you through the areas of a policy that can help you understand just what you do — and don’t — have covered. Then, we recommend you talk with your insurance advisor about any areas that concern you to find a solution that helps you sleep better on stormy nights…or after you start the dishwasher.
Policies are structured to build upon themselves, so it’s essential that you follow these steps and read thoroughly.
- Start by reading the “Definitions.” You may be thinking, “who reads the definitions?” Right. That’s exactly why we’re suggesting you read the definitions. “Flood” may not mean “flood” as you envision it. These are the important details.
- Now, take a look on the area of the policy that applies to the coverage you’re looking for — in this case, it’s “Property Coverage”
- We’re going to focus on Coverage, but specific to “Dwelling”, which is the primary structure of your home. This area details what the policy covers. In the case of this example, they will cover “direct physical loss” by a covered peril to the home, not including land” during the policy term.
- At this point, we need to make a stop in the “Additional Coverage” section to make sure there isn’t additional language added that applies to water claims. In this case, there isn’t.
- Now we can look at what “Covered Causes of Loss” includes. In this case, the company will insure all direct physical loss that isn’t excluded in the exclusions section.
- Step five being said, let’s take a trip over to the most important section — the exclusions. This is where the policy may take everything away. Remember that we’re focusing on water losses. See below for examples of those exclusions.
- Finally, review any endorsements that amend the policy you just read. If you’ve elected to add any coverage back at an additional cost, it will be found on a separate document.
Examples of Water Loss Exclusions
The examples below illustrate how policies remove coverage, making it more complicated to understand coverages.
- Freezing of plumbing, heating, AC, sprinkler systems or appliances. If you have not taken reasonable care to maintain heat in the home or to properly shut off the water supply and drain all systems, there won’t be coverage.
- Freezing, thawing, pressure or weight of water, snow or ice. This exclusion applies to the footing, foundation, bulkhead, wall, or any other structure or device that supports all or part of a building or other structure.
- Constant or repeated seepage or leakage of water, or the presence of condensation of humidity, moisture or vapor over a period of a week, months, or years unless such seepage or leakage is unknown to all insured and is hidden within the wall or ceilings or beneath floors. Meaning, if you know something is wrong but choose to do nothing about it…not covered.
- Water. Meaning:
- Flood, surface water, waves, including tidal waves and tsunami, tides, tidal water, overflow of any body of water, or spray from any of these whether or not driven by wind, including storm surge…which backs up through sewers, drains or overflows or is otherwise discharged from a sump, sump pump or related equipment;
- Plus any water below the surface of the ground, including water that exerts pressure on, or seeps, leaks or flows through a building sidewalk, driveway, patio, foundation, swimming pool or other structure;
- Any waterborne material carried or otherwise moved by any of the water previously mentioned;
- It doesn’t matter if the water was a result of nature. Booo.
See how details matter? Take heart — coverage CAN be purchased back.
Water Back-Up Endorsements
A water back-up endorsement adds coverage for water or waterborne materials, which can back up through sewers and drains or overflows or discharges from a sump, sump pump or related equipment. Additionally, in some cases, below surface water or waterborne materials, which can exert pressure on or seep or leak through building, sidewalk, driveway, foundation, swimming pool or other structures.
However, a back-up may not include the inability of the sewer or drain to handle the amount of rainwater, surface water or groundwater entering the sewer or drain. Again — details.
The water back-up endorsement is limited to the amount of coverage you purchase. Typically, coverage is sold in $5,000 increments. You should also note that the coverage amount you select is the most a carrier will pay for all cleanup costs and damage. When you think about it that way, $5,000 does not go a long way when you need to refinish a lower level properly after having it professionally dried (which is highly recommended to avoid mold. Now you need to go check on your mold and microbial coverage, which is typically minimal. You’re welcome.)
Flood Insurance
Would you consider water seeping in from your patio door as a “flood”? Your insurance company might. That’s because “flood” is generally defined as excess water on land that is normally dry. More specifically, “flood” is a general and temporary condition of partial or complete inundation of two or more acres, of normally dry land area, or of two or more properties, which includes overflow of inland or tidal waters, unusual and rapid accumulation, or runoff of surface waters from any source, mudflow or collapse, or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining cause by waves or currents of water exceeding anticipated clinical levels.
*Gasps for a breath*
The good news: a national program exists through FEMA with coverage you can purchase for up to a maximum of $250,000 for a single-family dwelling and $100,000 for personal property inside the home. The cost is determined by the flood zone in which the home is located, the elevation of the home and how the home is built, among other details.
If that’s not enough coverage for a total loss of your property, “Excess Flood” coverage can be purchased through private insurance companies in excess of the FEMA total.
Take a Closer Look at Your Policies, and Check In
The point of this is not to worry you; our team takes pride in ensuring our clients are protected to the best of our ability, and that extends to helping anyone better understand their insurance. We are insurance advisors for a reason — it’s not always cut and dry (no pun intended.)
Take a look at your policies, and hopefully some of this helps you make some sense of what is covered. If not, give us a call. We’re always happy to review what you have and ensure you walk away with what you need.
*Details and verbiage shared here are based on “standard” ISO policies and forms. Insurance carriers commonly amend and file variations of ISO forms to The National Association of Insurance Commissioners (NAIC). That’s why it is important to review your specific policy for definitions, coverage, exclusions and endorsements.
