FIGMAN's Blog

The purpose of this blog is to help everyone become more informed as insurance buying consumers. It is my plan to post something new every couple weeks. Some of this will be very basic and some in more detail. The information will be based on Missouri but most will apply to Illinois as well. I entertain your questions on the blog and if you want to ask something in private you can email me.

This version was a requested topic...

Homeowners water damage - covered or not? 

Remember, I am an agent in Missouri and I am referring to policy contracts in Missouri even though others should be near the same but each state has specific contracts. I am also referring to the "Special Form" policy which is the typeof policy most of us would have but there are exceptions to that as well.  If you bought your policy or updated it in the last 10 years you "should" have the Special Form policy.   A water damage loss in your home is one of the most misunderstood coverage anyone has on their home policy.

First let me provide some very general concepts. Generally if the source of the water originates outside of the walls of your home, there is no intended coverage from your insurance policy unless you have purchased an endorsement on your home policy known as Sewer and Drain Coverage or a Flood policy if that is warranted. Also note most policies will not cover any water damage whereby the water enters your home due to a defect or poor workmanship of the home construction. 

Some examples;  

 Example #1

It rains and rains and snows and the ground is saturated with water around your home. You notice you have water in your basement and it is determined there is a crack in your basement wall and it is obvious that is the source of the water leak. There is no coverage for the water damage in my opinion no matter what type of policy or endorsement. It is not covered because the water came in through the defected basement wall.  

 Example #2

 The same exact thing occurs above except there is no crack in the wall and the water goes to the least path of resistance, a floor drain in your basement utility room. It is considered a water backup and "if" you purchase the Water Sewer and Drain coverage as an endorsement on your home policy, this should be a covered loss up to the limit of coverage you buy and your deductible applies.  

Example #3

 You come home to a basement full of water and you have no idea what happened and you find out there was a main line clog in your cities system and there is no issue at your home that caused the backup. There are four possible scenarios here. #1 -The city does the right thing and pays for all damages. #2 - The city decides it is not going to pay and you make a claim to your insurance and you did not buy the Sewer and Drain backup coverage, you are not covered. #3- You sue the city either in civil or small claims court depending on the amount of the damage and in my opinion if you prove the city is responsible for your damages, you win, if not you lose. #4 - You purchased the Water Sewer and Drain Backup coverage. Your insurance company will pay the claim up to the limit you purchased and your deductible will apply.

Example #4

You hear a loud noise in the basement and you find that the water heater has blown a water line and the basement is flooded. Your standard home policy would cover the water damage caused by the sudden direct loss. 

Example #5

You buy a house near a dry creek bed and after a heavy snowy winter and a spring filled rainy season, you come home to find your house has water surrounding it and there is water in your basement. No matter what type of home policy you have and no matter what type of endorsement you bought, the water damage is not covered by your home policy. You would have to own a "Flood" policy to have your loss covered. 

My recommendations -You should buy the Sewer and Drain coverage endorsement as this coverage and your Special Form home policy will provide you with the broadest coverage possible. If you live in an area where there is even a hint of flood water, you should find out if a Flood policy is warranted.