Water Damage: What’s Covered and What’s Not

If you have standard homeowner’s insurance, you may think that you are covered for all damage caused by water of any kind, but this is not the case. There are certain types of water damage – specifically, sewer backup and overland water – that a standard homeowners policy does not cover. The good news is that you can purchase coverage for both that will ensure that you are protected against the broadest range of water damage – not just some.

What water damage does a standard homeowner’s policy cover?

Standard home insurance covers sudden and accidental escape of water from plumbing, heating, air conditioning, hot water tanks, dishwashers, and similar domestic appliance and system. Keep in mind if the water damage is due to freezing there are restrictions under your policy in order for you to have coverage. You can read more about that here.

Sewer backup coverage – do you need it?

Sewer and storm drain backups are the source of many home insurance claims, and more may happen in the future with the onset of more extreme weather and aging city infrastructure. A sewer backup, in insurance terms, refers to the sudden and accidental backing up or escape of water or sewage from a sewer or septic system, or a sump pump that is inside your home. While sewer backups can happen because of a mechanical failure or road work, the most common way for them to occur is during a torrential rainfall or sudden snow melt, when city sewers are overloaded.

Sewers usually back up into the basement, and many homes now have finished basements, that can include expensive items like entertainment systems and wet bars. It’s also where we store our Christmas and other holiday decorations, treasured family mementos, chest freezers, and additional items of both monetary and sentimental value. Even without high-end finishes in your basement, it can still cost thousands of dollars to mitigate the damages, replace damaged furnaces and hot water tank, disinfect and dry your basement, and repair damaged flooring and walls. Also, to protect treasured items, get shelves constructed of plastic or metal – wood will rot if subjected to water damage – and store your sentimental items on them rather than on basement floors.

In short, if you have anything at all in your basement, you probably want sewer backup coverage. You will want this coverage if you have a sump pump, since damage from a sump pump failure is also not covered under a standard homeowners policy.

Overland water coverage – finally, flood insurance

Canadian insurers are beginning to offer overland water coverage, or what may be more commonly called flood insurance. All homeowners with the limited exception of those who live in high risk zones can now purchase additional coverage to protect against overland flooding.

Overland water is the sudden accumulation or runoff of surface water. This includes torrential rain and overflow from freshwater rivers and lakes.

Some insurers offer both overland water coverage and sewer backup coverage as a package, since overland flooding is the usual cause of sewer backups. Some insurance companies also  offer mitigation discounts, if you have a professionally installed backwater valve, sump pump, or a water alarm you may be entitled to a discount.

Insurance companies are now limiting their sewer backup coverage

It’s very important to be aware that many insurance companies have started restricting their Sewer Backup Coverage. In the past, if overland water entered your home (water came in a window or basement door for example), and a sewer backup occurred at the same time the insurance company would cover the damage. Recently, many insurance companies have changed their Sewer Backup Wording and are NOT covering damage if there is the presence of both overland water and sewer backup in your basement at the same time.

Insurance companies that offer Overland Water Coverage would cover the claim, provided you bought their Overland Water Coverage. Also, check your policy to see if you have reduced limits for Sewer Backup or Overland Water. Many company are imposing sub-limits as low as $10,000 for this coverage, which would likely be insufficient if you have a finished basement.

Kennedy Insurance recommends clients purchase Overland Water Coverage to ensure they have the broadest water coverage. Call us today to find a solution to meet your needs.