Water Damage Insurance What it Means How it Works Types
Water Damage Insurance: What it Means, How it Works, Types
Anthony Battle is a CERTIFIED FINANCIAL PLANNER™ professional. He earned the Chartered Financial Consultant® designation for advanced financial planning, the Chartered Life Underwriter® designation for advanced insurance specialization, the Accredited Financial Counselor® for Financial Counseling, and both the Retirement Income Certified Professional® and Certified Retirement Counselor designations for advance retirement planning.
What Is Water Damage Insurance?
Water damage insurance is a type of protection provided in most homeowners insurance policies against sudden and accidental water damage. It does not cover damage resulting from the homeowners’ negligence or failure to maintain the home. Flooding usually requires a separate policy if available.
Key Takeaways:
– Water damage insurance provides coverage to homeowners against certain forms of water damage.
– Most policies will not cover water damage due to negligence or floodwaters.
– Burst pipes, plumbing failures, and toilet problems are the leading eligible water damage hazards.
Understanding Water Damage Insurance
Proper maintenance can avoid many types of water damage to real property. This includes watching out for ceiling drippage during a rainstorm or fixing a leaky pipe under the kitchen sink before mold becomes prevalent.
Water damage is a major factor in homeowners insurance claims. According to the Insurance Information Institute, water was the third-leading cause of claims from 2014-2018 with an average of $10,949 per claim. Water damage and freezing were the second most-frequent claim after wind and hail damage. About one in 50 insured homes has a property damage claim caused by water damage or freezing each year. Water damage is five times more likely than theft and seven times more prevalent than fire.
Types of Water Damage Claims
There are two common types of plumbing supply system failures: frozen pipes, which can burst due to a buildup in water pressure caused by freezing water, and failures in the supply system material resulting in a leaking or bursting pipe.
Plumbing supply system failures are the top reason for water damage claims, with 48% greater losses in dollar terms, averaging $5,092 per incident after the deductible. Of these, 65% were caused by a failure of the plumbing supply system material, while 18% were caused by frozen pipes. Drain system failures and sewer backups in finished basements were also top sources of claims.
Toilet failures were the second-leading cause of water damage, either from the water supply line or from the toilet backing up into the house. Water heaters failing and causing water to enter the home were also significant causes of damage. Washing machine supply lines were another top cause of damage.
Special Considerations
To mitigate water damage, have older homes inspected by a licensed plumber every five years, replace older water heaters, use steel-braided supply lines on washing machines, and turn off the supply lines when the machine is not in use. Avoid running the dishwasher or washing machine when no one is home.
