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Cautionary tales of water damage

Water damage is one of the most common personal insurance risks. But sometimes it’s hard to know if water damage would be covered by a homeowners policy or a flood policy. 

From damaging floods to burst pipes, water damage is one of the most common personal insurance risks. Just one inch of water can cause $25,000 in damage to your home.[1] According to one insurer, non-weather-related water losses are the number one source of property damage.[2] Among our own clients — large families and family offices specifically, who often have secondary homes — non-weather related water losses are the most common, accounting for approximately one-third of all homeowners claims over a ten-year period.[3]

Does homeowners insurance cover flood damage?

Because damage caused by flooding is not covered by most homeowners policies, as homeowners, it is important to understand the difference between a flood loss and other types of water damage.

Water damage can come from many different sources – a broken pipe, a hole in a damaged roof, or a water backup.

In general terms, flooding is usually caused by rising water from outside the home. Insurance advisors often hear a common misconception, “my home isn’t in a flood zone; I don’t need flood insurance.” Every home is in a flood zone, but homes in lower risk zones are typically not required to carry flood insurance by mortgage companies. Homes in high-risk areas have a 26 percent chance of suffering a flood over the course of a 30 year-mortgage, as reported by FEMA. In fact, homes in high-risk areas are 2.5 times more likely to suffer a flood than a fire.

So, is it flood damage or is it water damage? The information below outlines which policy may respond to a given scenario:

Avoid water damage while you are away

A client had water back up from the laundry drain into their unfinished basement while they were away. The basement was empty, so they assumed there was nothing to damage. However, it was winter, and the homeowners were out of town for an extended period. By the time they came back home, the heat in the house had caused moisture to rise through the first and second stories of the home. The resulting condensation caused extensive water damage — hardwood floors were warped, silk wall coverings had come unglued and fallen off the walls, and the sheetrock was wet and bulging. This water backup ultimately totaled more than $1 million in damage.

Secondary homes are particularly vulnerable to water losses, as small leaks can become big problems when no one is home to address the issue. Water can create significant damage when it goes unchecked.

Frozen pipes are another potentially avoidable source of residential water damage. If your home is closed during the winter in an area where there are freezing temperatures, you should have pipes and appliances drained completely to keep them from freezing and causing extensive damage. It is recommended that an unoccupied winter home’s temperature be set to no less than 55 degrees to avoid coming home to serious problems. Also, consider asking your alarm company to install a low-temperature monitoring device, which many insurers require in secondary homes.

When closing your home for the season, follow these tips to keep it safe and secure.

Defend against water damage

What can we do to protect our homes? Generally speaking, insurance policies require that reasonable care must be taken to maintain heat, or water must be shut off and all systems and appliances must be drained. Maintain your home with common sense precautions and make sure you are covered with proper insurance: 

  • Keep the temperature set at no less than 55 degrees – in fact, you may need to set your heat above 55 degrees when you’re away in extreme weather conditions depending on how well your home is insulated.
  • Drain pipes and appliances completely to keep them from freezing if you will be away for extended periods.
  • Have a low-temperature monitoring device installed by your alarm company.
  • Install water leak detection and shut off devices. They are available at reasonable prices, and your insurer may offer a premium credit for having the device in place.
  • Consider purchasing flood insurance. Even low-to-moderate flood risk areas account for about 25 percent of all flood insurance claims.[4] Make sure your policy covers water losses arising out of back-up of sewers and drains.

For more information on how to help protect your family and your property from losses related to residential water damage, review our comprehensive flood risk resources, and contact us to discuss your insurance options or request a homeowners quote.


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