Does Homeowners Insurance Cover Water Damage?

What types of water damage does homeowners insurance cover?

Homeowners insurance may protect against water damage, depending on how the damage occurred. Insurance from even the best homeowners carrier does not provide protection if the damage occurs as the result of a flood, neglect, purposeful action or lack of maintenance.

Below are circumstances under which homeowners insurance does cover water damage:

• Burst pipes, plumbing issues
• Rain or snow damage
• Accidental overflow of an appliance (such as a washing machine)
• Vandalism
• Damage to home from a leak in your roof (no coverage to actual roof)

As is typical of insurance, caveats and special considerations apply. Let’s dive into the details and learn more about water damage and home insurance. 

1. What water damage is covered by a homeowners policy?
2. What water damage is not covered by a homeowners policy?
3. How to file a water damage claim
4. How do water damage claims affect rates?

 

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When home insurance covers water damage

Coverage availability may vary depending on the type of homeowners policy you have, but water damage is usually covered if it's sudden and accidental in nature. The Insurance Information Institute (III) lists covered water claims as "any damage from water that comes from the top down, e.g., rain, snow, or ice."

Homeowners insurance also covers water damage caused by burst pipes, sprinklers and accidental overflow from appliances.

Open peril vs. named peril insurance — water damage

A peril is a source of loss. Most insurance companies write policies as "open peril" or "named peril." A named peril policy covers your home and personal property against only those perils specifically listed on your policy — usually 16 different circumstances. Named peril policies place the onus on the homeowner to prove the damage was the result of a covered peril in order for coverage to apply. An open peril policy is more comprehensive, covering all dwelling damage except what is explicitly excluded. 

To file a water damage claim with an open peril policy, you would only have to prove to your insurance company the damage was not caused by a specifically excluded cause of loss. On an HO-5 policy, the following perils (cause of loss) are not covered:

• Damage from a frozen or broken pipe and systems in vacant dwellings
• Damage to foundations or pavements from ice and water weight
• Theft from a dwelling under construction
• Vandalism to vacant dwellings
• Latent defects, corrosion, industrial smoke, pollution
• Settling or wear and tear
• Pets, other animals and pests
• Weather conditions that aggravate other excluded causes of loss (flood)
• Government and association actions
• Defective construction, design and maintenance

If you can afford it, consider insuring your home with an open peril policy to attain greater protection against water damage.

Mold remediation

Many homeowners insurance providers cover mold and fungi removal — or offer mold remediation insurance as a policy add-on. Mold insurance covers the cost of cleaning, testing and removal of mold (up to your coverage limit). In order for homeowners insurance to cover mold remediation, the source of the mold must be a covered peril.

 

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When does homeowners insurance not cover water damage?

A standard homeowners policy does not cover flooding, sewer backups, acts of negligence or poor maintenance. Let’s assess each of these perils and how to prevent further damage to your home or add additional coverage.

Flooding and flood damage

Given the exorbitant costs of flood damage, home insurance providers exclude flood coverage. In order to have any coverage, you should purchase a separate flood insurance policy from the National Flood Insurance Program (NFIP). Backed by FEMA, an NFIP policy limits coverage to $250,000 for the structure of your home and $100,000 for personal property.

If you're looking for a flood insurance policy, get a quote from Neptune Flood Insurance today.

Sewer backups or sump pump failure

A sewer backup can cause thousands of dollars of damage, but most standard homeowners policies do not offer coverage. A sewer backup can happen for one of many reasons — for instance, a system could be old, damaged by tree roots, or just become clogged over time. In order to have coverage for the damage done to your home, you need to add Sewer Backup Coverage. 

Sewer home insurance coverage comes in the form of an endorsement — a change or addition to a standard policy. A sewer damage endorsement can also insure your home against damages caused by sump pump failure. A sump pump is a device that prevents basements from overflowing by dispersing water equally. If a sump pump fails, it can result in flooding and subsequent water damage. A sump pump failure endorsement ensures your insurance company should cover the damage.

Negligence or poor maintenance 

There is no insurance coverage you can add or buy to cover water damage occurring as a result of negligence or poor maintenance. If you ignore a leaking pipe, leading to mold damage, your insurance company might not cover the subsequent costs. Below are common examples of negligence or poor maintenance resulting in a lack of coverage:

• Failure to cover pipes during freezing temperatures
• Failure to let pipes drip water continuously during freezing temperatures
• Water damage caused to a vacant home — for example, if you’re on vacation

 

How to file a home insurance claim for water damage

The process of filing a homeowners claim doesn't vary much by cause of loss. The first thing to do when you notice water damage is to take pictures of the surrounding area. From here, contact your insurance company immediately and they will handle the claim.

Typically an insurance adjuster will:

• Investigate the water damage to determine the source*
• Estimate the cost of repairs and give you an estimate

*This is an oversimplified explanation of this process. Depending on the complexities, it can take a long time to determine the cause of loss from water damage. You can expedite this process by insuring your home and contents on an open peril policy. An open peril policy only requires the claims adjuster to determine the excluded perils did not cause the damage.

 

Do rates increase after a water damage claim?

A water damage claim on your record can be quite impactful; on average, rates were hiked by 19% after a water damage claim. Water damage causes the fifth-highest increase in premiums nationally — the first being fire claims. See the below table to see data on up to two water damage claims.

Number of Claims	Average Annual Premium	% Difference
No Claims	$1,478	-
1 Water Damage Claim	$1,757	+19%
2 Water Damage Claims	$2,020	+15%

If you're looking for cheap homeowners insurance after a water damage claim, take a look at some of the post-water damage claim rates from top insurance companies below to get started in your search. Remember that our rate-gathering methodology likely does not match your own homeowners profile exactly. Learn more about home insurance after a claim.

HOME INSURANCE RATES BY COMPANY AFTER WATER DAMAGE CLAIM

Insurance Company	Annual Rate After Water Damage Claim
Allstate	$2,028
American Family	$2,686
Farmers	$1,756
Liberty Mutual	$1,702
Nationwide	$1,542
State Farm	$1,464
Travelers	$1,753
USAA	$1,528

With a monthly premium of $122, State Farm proved to be the cheapest company after a water incident. Nationwide and USAA are also worth looking into if you're concerned with the affordability of your rate after a water damage claim.

One of the best ways to secure a good deal on homeowners insurance is to shop around and compare rates. Use The Zebra's comparison tool below to compare quotes side-by-side and see how much you can save!