Do You Have the Right Water Damage Coverage?


Water damage, much like a fire, can be a disaster for homes. According to industry estimates, 14,000 people in the United States experience a water damage emergency at home or work each day, and 98% of basements in the country will incur some water damage at some point in the home’s life. Annually, insurance companies pay out $2.5 billion for damage caused by water and mold, with the average claim costing nearly $7,000.

However, many policyholders don’t realize that the types of water damage that are covered can vary based upon their coverage and endorsements. Taking a bit of time at the start of the year to evaluate and understand your coverage can save you a headache in the event of water damage.

Damage covered by a homeowners policy

A standard homeowners policy will cover some, but not all, types of water damage. If the damage occurs suddenly or accidentally and the source is inside your home, such as a burst pipe or faulty water heater, then homeowners insurance will likely provide protection. However, there are limitations to this coverage, and you should check your policy to understand what incidents will be covered and if the resulting damage is included. Gradual water damage or damage that is caused by water that originated outside of the home is often not covered by a standard policy.

Flood insurance

Flood insurance helps policyholders recover after damage and loss caused by an overflow of inland or tidal waters, unusual and rapid accumulation or runoff of surface waters, and mudflows. A standard homeowners or renter insurance policy does not include flood damage, as it results from water that originates outside the home. This coverage can be vital, even if you don’t live near a body of water. Heavy rains can cause flooding across the country, and flash floods have occurred in all 50 states. Luckily, flood insurance is affordable, and homeowners who don’t live in designated flood zones will pay even less.

Water backup endorsement

Another type of water damage that’s excluded in a typical homeowners policy is water backup. This refers to damage caused by water that seeps up from the ground, backs up through sewers and drains, or overflows through a sump pump. To supplement this gap in coverage, many insurance companies offer an optional water backup endorsement that can be added to a homeowners policy. The endorsement is usually very affordable, with the cost varying depending upon your risk exposure and the limits you select. This coverage is becoming more critical with each passing year. According to the American Society of Civil Engineers, over 500,000 miles of sewer lines across the United States are around thirty years old. The number of reported backups has been increasing at a rate of about 3% annually. This type of water damage can happen to anyone in any part of the country, so it’s essential to consider adding a water backup endorsement to your policy.

Water damage can happen to any home, regardless of location or floorplan, and according to a 2021 study by the Insurance Information Institute, over 28% of all insurance claims from 2015-2019 were due to water damage. Reviewing your coverage and options can give you peace of mind, and by reaching out to Westwood, you can find a policy with the proper endorsements to provide you with the coverage you need at a price that works for you.