Water Damage Insurance

Protecting You Against the Second Horseman of the Home Owner's Apocalypse: Water

Your home owners insurance policy will provide water damage insurance that covers claims from leaking pipes. Rain coming in as a result of roof damage will also be covered. If your dishwasher or a washing machine decides it wants to wash your entire house that will also be covered.

However, flood insurance is a separate policy from home owners insurance and not the subject of this article. Water coming in from the surface of the ground may be covered in you water damage insurance, but it depends on the source of the water. It will not usually cover damage from groundwater, or from plumbing leaks that originate outside the foundations of your home.

If you lived on top of a hill, in the Athabascan Desert, with no plumbing you would have no risk of ever suffering water damage. For the rest of us there is at least some risk that we will suffer serious loss from water.  Over the years water damage insurance became part of the standard offering for home owners insurance.

Homes with basements are at a greater risk for water damage. Ground water is natural, and even if your house is well above the level of the water table runoff from storms can flow into your basement.

People whose basements are in heavy clay often discover that the swelling and contraction of the clay can cause cracks in their foundations. These cracks become entry points for water intrusion. In many homes a sump pump is required to keep water from accumulating, but if there is an electrical failure during a thunderstorm they may discover that their basement also doubles as a swimming pool.

Chances are any water entering the basement from outside is likely to be considered outside the scope of your water damage insurance policy’s coverage.

Still, there are lots of ways that water can damage a house that are covered by your water damage insurance. If a storm rips a hole in your roof, you may end up with a lot of water in your house. Water overflowing your gutters may enter into a ground-level window. A washing machine hose may burst. Pipes may freeze. A toilet might overflow. All of these can result in some pretty hefty claims.

While it is in the homeowners interest to avoid these problems, some insurance companies provide additional incentives for damage-mitigating behaviours. For instance, some insurance companies will give you a discount if you install a moisture alarm in your basement. It might alert you to a problem while it is still small.

Some insurance companies will discount your policy if you install burst-proof washing machine houses. They know from history that rubber washing machine hoses are the source of a lot of water damage claims.

Insurance companies sometimes inquire about the type of pipes in your home. They will price your policy based on the type of plumbing. They prefer plastic and copper pipes to lead pipes. They prefer new plumbing to old plumbing. If you upgrade your piping be sure to tell your insurance company. You might qualify for a reduction in your rates.

This preference for new pipe does not always work out for them, as I explain in my own little story about my first hand encounter with water damage insurance..

My New Plumbing Story

When I first moved into my house I added an upstairs bathroom. To get the plumbing to the second floor I used PEX piping. PEX is a fine product now, but at the time the product was fairly new and they had a flaw in their materials. They ended up recalling all their pipe. I found out about this problem after my pipe burst and flooded my first floor and my basement. I probably would have had minimal damage but it happened while I was away on vacation, so the water got deep and wood floors had time to swell and crack.

By the way, my insurance company did a crackerjack job paying for the damage. When we called them they knew what to do and that day they had Service Masters cleaning up the mess. My downstairs bathroom was replaced, my wood floors were resanded, and I received a check for the personal goods damaged.

This same insurance company received praise after Hurricane Katrina for the prompt payment of claims without hassle or quibbling. It is something to consider when buying insurance. What you pay out in rates is important, but what they pay out in claims is also important. Certain insurance companies have a reputation for finding reasons not to pay claims.

I will provide a short commercial for them here, and maybe they will forget about all the little cutting remarks I keep making about insurance companies.

USAA was set up to provide insurance for Army Officers. Back in the day officers looked like a bad risk to insurance companies because they were so transient. Some of the officers realized that they were really a risk-averse group and very stable so they should be a better risk when it came to insurance. They formed USAA insurance to insure only officers and it turns out they were right. Their claims were low and the business was profitable. They returned some of those profits to their members and they kept rates low.

The strong values they brought into the world of insurance resulted in a company with a great reputation in the industry and among its members. They pay claims quickly and with a minimum of hassle.

Over the years they have expanded and now cover anybody in the military and their families, so even those whose father's served a short stint can qualify to join USAA. I recommend you check them out at www.USAA.com.

Unfortunately not paying claims is a likely outcome if you experience a visit by the Third Horseman of the Homeowner’s Apocalypse: Nature.

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