Water loss claims and the misconceptions of what's covered or not

July 28, 2017
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Did you know that water loss claims are the second highest reported claim in Colorado after hail? Did you know that less than 25% of water losses are covered by your homeowners insurance? How can you know when to file a claim if you don't know how you're covered? First you need to know what different types of water losses there are, which ones could be covered, and how to find if that coverage is included or needs to be added to cover your home.

There are five common water losses that homeowners may encounter: flood water, busted pipe, slow leak, over flow, and water/sewage back up. Only two of those losses are covered on a standard homeowners insurance policy. Do you know the difference between each loss and why one would be covered and the other not?

The National Flood Insurance Program has established a legal definition for flood as a general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow. The cause of the flood is generally a natural occurrence, often weather related. Damage caused by flooding is not covered on your homeowners insurance. A property owner can purchase a separate flood insurance policy, the majority of which are regulated by the Federal Emergency Management Agency (FEMA) an agency of the United States Department of Homeland Security, and they have limits of coverage for the building and contents. The primary factor with the cost of flood insurance is if the flood zone the property is located on will dictate the premium.

Busted pipe and slow leaks can often be confused and thought of as the same loss, however, water damage caused by a busted pipe is covered and water damage caused by a slow leak is not. Busted pipes can occur due to various reason such as a frozen pipe, drilling through a wall cavity and striking the pipe, etc. Slow leaks are associated with neglect of wear and tear. Many water pipes are located behind drywall in the wall cavities and are not accessible to update or maintain, and therefore, can be a cause for frustration for homeowners when there is a leak and it is not covered by homeowners insurance. Often, slow leaks can be caught early and remediated quickly and at a low cost, however, knowing the signs of a slow leak are not only prudent but also imperative. Some early signs to watch for are warped or bubble paint or drywall, discolored flooring (sometimes red-brown), mold growth, spongy surfaces, discolored water circles on the ceiling, cracks, moldy or musty odors, temperature changes in a room, dripping faucets, reduced pressure in faucets, drainage flowing away from your property, and sinkholes or flooding in your yard are a few to be aware of. When looking for water damage, be aware of where most water will pool, generally directly below any water faucets and the base of the wall and floor. Watch for floor boards that separate from the drywall as a key indicator as well.

Overflow vs water back-up or sewage back up. Many might think that toilets over flow frequently and can quickly and easily be cleaned up and not cause a lot of damage. Because of this, many may believe that damage caused by overflow wouldn't be covered, however, the opposite is true. Overflow damage is most often associated with a toilet, and if caught immediately, can be cleaned up and not cause significant damage, however, if a homeowner were away from the home and didn't catch the overflow prior to leaving on a vacation, the damage could be devastating. Another scenario may be overflow of a faulty appliance such as a dishwasher, refrigerator, etc. The majority of these cases, the water loss will be covered on your homeowners insurance, should the blockage or break occur inside the structure of the home. When the cause of the damage occurs outside the physical structure of the home, outside the foundation, the loss is associated with a water back-up or sewage back-up. This may occur when storm drains or sewage drains are blocked with debris, or if a tree root penetrates and blocks the water run off pipes. Tree roots are attracted to sewage pipes as they contain nutrients that can be used by the tree, tree roots will expand the equal distance as the branches above as well. So follow how far the branches reach near your property and you can be fairly sure the roots below ground expand the same. If you have a broken drive way and your tree covers part of your driveway, the cause of the broken concrete could be the tree roots and also show how strong those roots are as well. Should you have a blocked drain outside of your foundation that causes water to back up into your home, the damage is not covered by a basic homeowners policies. As this can be a common loss, many carriers have an endorsement that can be added to your policy called water back-up or sewage back-up coverage. There is usually a limit of coverage from $5,000 to $25,000 in most cases. Adding this extra coverage is more often than not, very inexpensive.

Understanding all the various intricacies of your insurance policy may make your eyes water over, however, should you have any concerns about your coverage, be sure to contact your agent and voice them. If you do not have an insurance agent, reading through your policy documents and having them available in a safe place is highly encouraged.