5 water claims that may or may not be paid under your Standard HO-3 Homeowners Policy!!!

Sump back up or overflowNature Waterfall with raindow

You should never look to coverage for a sump back up or overflow claim on your standard homeowner’s insurance policy. However, if you carry a water/drain back up endorsement on your policy, depending on the carrier, there may be coverage to pay for such a loss.

It is always a good idea for those homeowners who have sump pumps in their basements to consider adding the water and sewer drain back up to your policy. Generally it might cost you somewhere between 50-150 dollars a year for up to 20k in coverage.

Deductibles vary and usually you can select a specific deductible for this amount of loss. This can come in handy for those homeowners who have sump pumps and live in areas that can be prone to heavy rainfall causing water back up into basements!

  1. Pipe burst or leak from appliance

Water damage from pipes bursting that are sudden and accidental are generally covered on many homeowner’s insurance policies. The HO-3 policy would generally cover such a loss. One exception would be pipes bursting due to freezing if “reasonable care and action” is not taken to protect the pipes from freezing. Reasonable action means having heat on at the home and the home not being vacant.

 Additionally it would cover a “sudden and accidental” leak from an appliance such as a refrigerator or washing machine. However the key here is to take action to mitigate any further damage. What the insurance company means is that you must act swiftly in the event of a water loss.

I always strongly advise my homeowner’s to file a claim or a claim’s inquiry (if your carrier allows) to make sure that they are meeting all “conditional” requirements of the insurance policy. Most policies will cover you for a water loss but decline any claims for mold damage if you take a “wait and see approach.”

You might think that your shop vac is suitable to pick up all that standing water, but what you may not know is your drywall/insulation/baseboards are likely to “wick up” the standing water into the walls. Unless you have a professional water restoration company employ their methods of fully drying out the walls and all exposed materials, you run the possibility of getting push back from your insurance company.

 And guess what the policy should pay for the professional water restoration to dry out the walls with you only being on the hook for your deductible. This is great news and well worth it if you experience a water loss. Not only is mold remediation costly, but it is not something you can generally just “live with” until you have the money to pay out of pocket. So never take a “wait and see” approach on a water loss unless you like mold in your lungs, clothes, and everywhere between!

Likewise, don’t expect the insurance company to pay you for the cost to repair the broken pipe or the damaged appliance. Those items are considered wear and tear. The coverage under the policy only protects you for the damage caused by the water, not the damage to the pipe or the appliance.

  1. Water leaking under slab from pipe

These loss types can be extremely expensive. If you have a long term leak under your slab that compromises your foundation it can prove a nightmare for a homeowner. Most insurance companies will provide some coverage for the tear out of the concrete in order to get to the damaged pipe, as well as, the cost to replace the slab and the flooring.

But yet again, they will not offer any money towards the repairs of the damaged plumbing. The plumbing damage is always considered wear and tear; unless, there was another covered loss under the policy that caused the pipe to burst.

You as a homeowner can avoid pipes bursting or leaking under slabs by avoiding planting slow growth trees close to the home. These trees are known to wrap their roots around underground plumbing and can exert a large enough level of force to crack the pipe and get a nice drinking fountain.

  1. Water back up from sewer or drains

As a general rule your standard homeowner’s insurance policy does not include water back up from sewers and drains. A good agent is aware of this and, more often than not, will always quote homeowners with this endorsement added into the quote.

However, if you have an unscrupulous agent who is trying only to get you to your magic price so they can watch you do your happy dance, and then do their own happy dance on the way to the bank; chances are they will not counsel you on this extremely important coverage.

There are exceptions to the rule. Many new homes are built with spill back cut of valves which operate to block any back up of water from sewer or drain pipes coming into the home. They are usually very effective and rarely fail.

However, one should consider if they can afford to not have such a coverage. When the toilet backs up into the home spilling raw sewage all of the bathroom, do you really want to take a wait and see approach? Chances are you want to call someone asap and know that it is a covered loss. After all, do you think the sewage cleanup guy is doing the dirty job for chump change?

If you consider this coverage it might cost you somewhere around 50 a year for about 10000 in coverage. Not too shabby if your floor every gets covered in $%!#

  1. Water runoff due to heavy rains

I don’t know of any standard policy or endorsement that would provide such coverage to a homeowner. The only coverage to pay out on such a claim would be a flood insurance policy. Flood insurance for those homeowners in Inland areas might be more reasonable than you think. I have some homeowners with over 250k in coverage that are paying less than 500 a year. That is a meager amount of premium compared to the devastating loss of flood!

  1. Mudslides or sinkholes

Any guesses on this one? You got it, no coverage! What a thought for those people in Florida. While there may be some coverage that is mandated in Florida since they are so prone to such loss types, it is hardly enough to compensate a victim.

My guess is the way they are able to get around such a loss type is that insurance never applies to damage to your land. The only thing that you are able to insure is your home and property from “covered losses.” Insurance companies always exclude sinkholes and mudslides from the list of “covered losses.”

  1. Rainwater leaking into the home

This can be a tricky one. It has to do more with why or how the rainwater was able to get into your home. If your roof is rotted due to 30+ years of age and you develop a leak good luck trying to get your insurance company to pay.

However, if your wife has nagged you about those overhanging branches and you just kept putting it off and that storm comes through and sends that 100 year old ½ ton branch into the living room skylight during hurricane season and your recliner starts to become a reclining bathtub – guess what – you have coverage!

Or if your distracted teenager left his bedroom window open after sneaking out for the night prior to that spring storm coming through and then damaging all their precious electronics, soaking the carpet in rainwater, and their bedding; more than likely you will be covered. This is true as long as the insurance company doesn’t consider it as being intentional.

Usually as long as you do not have a bankruptcy or some other large debt looming over your head you can get an insurance company to pay for a boneheaded mistake. But be prepared to submit to more questions than normal. Due to the large amount of fraud these days’ loss types involving accidental negligence are red flags for fraud and in such they tend to investigate these claim types way more than say a tree branch coming through your bay window.

  1. Contaminated water

Generally all policies have a pollution exclusion. So I doubt you could argue a claim with your insurer. But it is important to list such a claim as more and more rural areas are attesting that “fracking” is polluting their water supplies.

It is hard to bathe in water that has harsh chemicals like methane and the like. Even harder to cook with the stuff or drink it. I don’t have any suggestions for how you would even find coverage for such a thing.

But it is an interesting scenario that I am sure more than one person has found themselves in. Likewise contaminated could mean parasites, sewage runoff from a nearby chicken farm, or anything that impairs the quality of the water.

  1. Flood waters onto your property or home

Sadly your standard homeowner’s policy never covers flooding of your home or property. In fact, the NFIP was created out of the void left behind by private insurance flat out putting its foot down, crossing its giant industry arms, and bellowing out a resounding NO!

Enter the federal government with the National Flood Insurance Program or NFIP for short. While all flood insurance is technically backed by the federal government there are many insurance companies that will sell you a NFIP backed flood policy as an endorsement to your existing homeowner’s policy. This can make things easier from a billing perspective since it is added to your current bill (for most homeowners that means it is billed to escrow) thus creating one neat monthly payment.

FEMA is a branch of the Federal Government that was created to help administer support for survivors/victims of declared disasters. It stands for Federal Emergency Management Agency and is a great resource in times of flooding or other disasters across the United States. But don’t expect FEMA to fully blanket you in anything other than Government Issue cotton blankets. The money that is given to those uninsured in the event of a catastrophic loss is usually a fraction of what it would cost to rebuild or purchase a new home of similar kind and quality.

Also, FEMA does not offer support to homeowners that have a secondary home that is damaged. So if you have a lake or seaside home that is your vacation getaway make sure you insure your little cottage by the sea; or else you could end up like many victims of Hurricane Sandy!

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