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Water Seepage and Leakage Coverage (What Homeowners Insurance Covers)

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Reviewed byJoel Ohman
Founder, CFP®https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/truthaboutins-live/2020/03/joel-ohman.jpg

UPDATED: May 1, 2020

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Overview:

  • Water damage accounts for close to 20 percent of all property loss insurance claims costing the insurance industry $2.5 billion dollars per year.
  • Water leaks and seepage are generally not included in your standard homeowners policy. According to providers, this type of water damage is caused by a lack of home maintenance rather than a “true” insurable event.
  • Seepage insurance, separate riders or endorsements, as well as additional flood insurance can begin to shore up any leaks in the coverage amounts allotted for water damage in your homeowners policy.

Does homeowners insurance cover water damage from leaking plumbing? Though water damage is a clear problem among homeowners and insurance providers alike, it’s not so clear what type of damage is covered under your standard homeowners policy. What about water leaks and seepage coverage? Insurance providers have divided water damage claims into different types. Finding the right type of home insurance is important.

Perhaps one of the worst things that can happen as a homeowner is being unprepared for possible damages to your home and realizing after the fact that the accident is not covered under your policy.

Some water damage is not covered by homeowners insurance. Paying out of pocket is not the top preventative measure you want to take.

In this article, we’ll cover the extent of water damage liability and claims in the United States, go over the types of water damage emphasizing grey areas, and provide advice and guidelines on how to make sure you are protected when it comes to water damage insurance on your home.

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Water Damage & Homeowners Insurance

Most people think about catastrophe or flooding when they think about water damage, but this is only a small piece of the puzzle when it comes to the types of damage water can cause in your home. Water damage not involving flood and catastrophe affects thousands of people each year with the average cost of a water damage claim at $10,000, and are among the top five home insurance claims.

You must educate yourself on the risks of water damage to your home so you are not left paying the bill.

According to Water Damage Defense, the nation’s statistics on water damage to homes provide a grim portrait and put into perspective just how often this type of damage occurs. Insurance industry experts place estimates of affected people in the U.S. at around 14,000 (figures represent at home or work) while a whopping 90 percent of basements in the U.S. have experienced some form of water damage.

Homeowners Insurance Claims by Frequency and Cost Over Five Years
Cause of LossClaims FrequencyCost of Claim
Property damage5.39%$12,322
Wind and hail2.10%$10,182
Water damage and freezing2.05%$10,234
Theft0.31%$4,264
Fire and lightning0.28%$68,322
All other0.66%$5,823
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As you can see from the information provided by the Insurance Information Institute (III) in the chart above, claims for water damage have amounted to well over $10,000 over five years and was only bested in frequency by weather-related incidents like hail and wind.

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Water Damage Claims

The III keeps up-to-date records of yearly figures on insurance industry claims including types of property damage. According to the III, the costs associated with what is referred to as non-weather-related water damage are amounting to billions in losses every year.

That is costing billions for insurance providers, but it is also costing policyholders via increased rates, premiums, or a total drop of coverage for non-water-related damage.

The statistics provided in the table below show that water damages have remained one of the top three causes of personal property damage for at least four consecutive years.

A handful of those years, water damages even peaked at the top spot for causes of property damage for homeowners. This category includes weather-related damages but still manages to place an important emphasis on the extent of water damage in the U.S.

Homeowners Insurance Claims by Type of Loss
Cause of Loss20132014201520162017
Property damage95.50%95.80%96.30%96.60%98.10%
Wind and hail30%28.7%21.2%34.1%38.2%
Fire and lightning28.5%23.9%21.6%25%35.1%
Water damage and freezing27.1%34%46.1%30.2%19.5%
Theft3.4%2.4%1.7%1.8%1%
All other property damage6.4%6.8%5.6%5.5%4.4%
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Claims for water damage consistently top the list of causes for property loss claims each year according to the III. With an increase in claims comes stricter regulations on what and how much the insurance industry will offer for coverage.

Generally speaking, this means the standard homeowners policy will cover a limited amount of water damage with a separate policy or rider needed for coverage of the remainder of causes.

This has already been taken into consideration concerning flood damage with the Federal Emergency Management Agency (FEMA)’s flood insurance program. The sale of flood insurance policies is handled by local insurance providers. The amounts are too high for an insurance provider to cover at once, and the same has seemingly been instituted for the various types of water damage that the insurance industry has classified.

These may seem like tricky maneuvers for insurance providers to skip out on their end of the bargain, but in actuality, these efforts are to protect the provider and the policyholder by regulating costs and keeping monthly rates low.

If you’re wondering how to make a successful water leak insurance claim, the main thing to consider is the source of the leak and whether it’s covered by your policy. You’ll need to show the insurance company that the leak was not something you could have prevented and not caused by a maintenance issue.

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Types of Water Damage

As emphasized in the previous sections, the frequency and costs of water damages to personal property are extensive and should be one of the top concerns for any homeowner when it comes to safeguarding their investment. The damage itself, in addition to mold removal costs, runs the insurance industry $2.5 billion per year. That is a large chunk of change that costs policyholders as well — in rate hikes.

Water leaks from homes in the U.S. can exceed a trillion gallons of water a year according to the EPA’s water leak statistics, which is equivalent to the annual water usage of Los Angeles, Chicago, and Miami combined.

These individual leaks often seem tiny but over time generate enormous waste and damage to a home.

For example, a running toilet generally wastes over 200 gallons of water a day and a 1/8-inch crack in a pipe is more than capable of wasting 250 gallons of water in a day. Is a leaking toilet covered by insurance? Not usually, because it’s considered a maintenance issue.

Insurance providers recognize that a large number of homeowners insurance claims result from various forms of water damage, so they have broken water damage down to a few different categories. Before we get to exactly what is covered in your homeowners policy, check out the video below that explains the categories of water damage.

Below is a more detailed breakdown of each category of water damage.

Sudden & Accidental Discharge (Above the Foundation)

This coverage is typically included on a homeowners insurance policy and covers any sudden or accidental water damage. For instance, this would include damage from a burst pipe as long as it was not caused by a lack of maintenance. It is not mandatory, so you should certainly verify this coverage exists on your policy.

Water Leaks & Seepage

What is seepage and leakage? It’s water damage that, over time, can cause structural damage to your home.

This type of coverage is generally not included in your standard homeowners policy due to the damage resulting from lack of maintenance. However, upon request, most insurance providers will offer what is known as slow leak coverage; this type of damage is generally accrued over time from faulty plumbing systems that cause slow leaks from pipes inside the walls.

Foundation Damage Caused By Water

This specifically covers foundation damage that results from water damage from your plumbing. In the industry, this is generally known as “foundation water damage coverage” and can help reimburse the policyholder for any plumbing-related disaster that disrupts the integrity of your home’s foundation.

Sewer or Drain Backup

Damage resulting from sewer or drain backup is not automatically covered on every homeowner’s insurance policy. It is better to check to know for sure.

Sump or Sump Pump Discharge

This coverage will be a rider or add-on endorsement that reimburses policyholders if water back-up in the sump or sump pump causes it to overflow and damage your home. If you have a sump or sump pump, you should call your agent or insurer to verify if you have this type of coverage.

Does homeowners insurance cover water damage?

When it comes to water damage, you should always find out the specifics of what is and is not covered by your insurance agent. This may not prevent damage from occurring, but knowledge in any water-related property damage incident is half the battle to full payment and recovery.

Being aware of the particulars of your policy when it comes to potential water damage can help you decide if you need additional coverage in the form of an add-on rider, endorsement, or higher premiums.

The video below gives a nice brief about what is covered under your standard homeowners policy when it comes to water damage.

Does homeowners insurance cover water damage from leaking plumbing or from a broken pipe? What about a leaking toilet or shower? Always be sure to ask your insurance provider whether you are covered for specific water-related incidents.

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Leakage & Seepage Coverage

This coverage is designed to protect you against losses from long-term leaks, meaning water damage that did not occur “suddenly and accidentally,” which would be a burst pipe on your water heater.

This is the coverage for that water leak you didn’t know about until the ceiling collapsed. Many insurers don’t offer this coverage or only offer it by endorsement for an additional charge.

As mentioned previously, the thinking on the insurer’s part is this sort of damage is caused by a lack of home maintenance rather than a true insurable event, which is your “sudden and accidental” water damage. You would be hard-pressed to obtain this coverage for a dwelling policy for that exact reason.

Ways to Prevent Water Damage in Your Home

The best way to avoid water damage from leaks or seepage is preventative measures. Accidents happen, but you can be an informed homeowner and reduce your chances of having to make a water damage claim.

The video below gives you a rundown of some of the basics of preventing water damage in your home sink.

Here we have provided a list of further measures that can be taken by each homeowner to prevent any need for a water-related claim to your insurance provider.

Prevent Basement Water Seepage

  • Reseal your basement – Having your basement resealed is a cheap and easy way to protect your home from water seepage that may come from the soil surrounding your home’s foundation and basement. You should reseal your basement every two to five years depending on the amount of moisture in the region and water flow directed toward your home.
  • Install a backwater valve – If you are adding a backwater valve during the homebuilding process, costs are $150–$250, whereas adding it to an existing home costs around $1,000–$2,000. However, it is money well spent as it allows sewage to only flow out of your home, not back in.
  • Ensure all water drains away from your home – This involves making sure gutters and drainpipes flow at a distance and away from the home’s foundation. Also, the soil around the home needs to slope down at least 6 inches within 10 feet of the foundation to keep the foundation and basement dry. In more extreme cases, a French drain system along the foundation that redirects flow away from the physical structure can be installed.

Maintain & Understand Your Indoor Plumbing Systems

  • Inspect appliance hoses and faucets – Be sure all interior faucets and/or hoses surrounding the house are not leaking water. Unchecked outside leaks can be particularly dangerous when it comes to seepage along the foundation and basement of your home.
  • Shut off the water supply to the washing machine when away for extended periods – If you expect to be away from your home on vacation, you may want to shut off water supply valves to larger appliances like the washing machine. Even slow leaks left unchecked can cause extensive water damage to your home that insurance providers may not cover.
  • Know where the main water shut-off valve is and understand how to turn it off – This is basic to understanding the operation of plumbing within your home. If there is a leak, especially one where you cannot find the source, you want to know how to shut off the supply of water completely as soon as possible.
  • Inspect showers and tubs regularly – It is important to regularly inspect the caulking around the tubs and showers of your homes to prevent unseen leaks and seepage. Water regularly flows in both these areas and faulty caulking and sealant can cause floor rot or ceiling damage that will go unnoticed until it is too late.
  • Install an emergency pressure release valve in your plumbing system – This is often required in some areas but should be done even if it is not to protect your home from water damage. This is like an emergency stop valve for your heating system. The installed valve offers an alternate route for water should the pressure and temperature rise above a certain degree.

Repair & Protect Your Home’s Exterior

  • Caulk and seal windows – Similar to sealing tubs and showers, windows are your first line of defense against rain. You need to be sure to safeguard your home against possible water seepage around the frames of your windows.
  • Check your rain gutters and drainpipes – Make sure that all debris is regularly cleared from gutters and drainpipes to avoid rainwater flowing toward your home’s foundation. All drain pipes should direct water away from the house.
  • Install gutter guards – Another measure that will go a long way in keeping water flowing away from your house instead of accumulating on the roof.
  • Inspect your roof – Basic roof inspection for damaged or missing shingles can be a top preventative measure to avoid interior ceiling damage.
  • Check sprinklers and irrigation systems – Checking home sprinklers is a great way to prevent water from damaging the walls and foundations of your home. If you live in an area with freezing temperatures, it is also a good idea to regularly turn off and drain outside faucets to protect against frozen pipes.

Protect Your House From Sewer Backups

Sewer backups are a separate issue that we briefly touched on earlier. If you have a sump or sump pump, you may want to look into coverage for sewer backups. Your standard homeowners policy will not cover this type of water damage, so be sure to talk with your local insurance agent to find out more information. In the meantime, you can start taking these measures to prevent any future sewer backup incidents.

  • Properly dispose of grease.
  • Properly dispose of paper products.
  • Replace your line with a new plastic pipe.
  • Correct illegal plumbing connections.
  • Periodically cut tree roots.
  • Install a backwater prevention valve.

Sewer backups are a particular nuisance for homeowners and typically a grey area when it comes to insurance claims. But by following these easy steps, you can do your part in avoiding it ever happening in your home.

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Flood Insurance

Flood coverage is not available on any homeowners policies from any insurer in the U.S. If you want flood insurance, it is available only through the National Flood Insurance Program.

Contact a local independent insurance agent if you’re in the market for a new homeowners policy or if you’re unable to obtain the premium or coverage you need with your current carrier.

When it comes to water damage in the home, a traditional homeowners policy will only cover the basics.

The coverage for the remainder of damages that can occur from water will need to be addressed by additional riders or endorsements. This, of course, includes all flood insurance as well as most issues dealing with leakage or seepage.

Do you know if your home foundation/basement has been properly sealed?

If you are not sure, you may want to find out or simply have it sealed for safe measure. In the least, speak with your insurance agent and find out exactly what is covered under your standard homeowners policy when it comes to water damage. These are simple measures that, if taken now, can prevent you from paying out of pocket in the long run should damage from leakage or seepage occur.

Was this article helpful? If you’re interested in seeing a more accurate estimate of what it would cost you to insure your home with additional water damage protection, then check out our free online quote option below. Just type in your ZIP code, and we will guide you through the rest of the process. It is that simple.

References:

  1. https://www.waterdamagedefense.com/pages/water-damage-by-the-numbers
  2. https://www.iii.org/fact-statistic/facts-statistics-homeowners-and-renters-insurance
  3. https://www.fema.gov/national-flood-insurance-program/How-Buy-Flood-Insurance
  4. https://www.https://www.epa.gov/watersense/fix-leak-week

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