A little water can do a lot of damage. If a pipe bursts in your rental property, you’re dealing with the broken pipe itself, as well as the damage to the building structure, the carpet, the furniture and the various belongings impacted by the leak. It all adds up fast. That’s why it’s important to understand the water damage coverage in your landlord insurance.

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What is covered under water damage?

When someone mentions water damage, they could be referring to a leak in the roof, a broken pipe, a backed-up sewer, or flooding from a storm. To the average person, these may all count as different types of water damage. However, to an insurance professional, these are all different losses, and a landlord insurance policy may treat them very differently. Some types may even be excluded from coverage.

Flood damage, in particular, is treated as a separate type of loss event, meaning that it will not be covered as water damage in a standard policy. If you need flood insurance, it is necessary to secure additional coverage specifically written for flooding. 

According to Investopedia, plumbing system failures are the main cause of water damage claims, and 65% of these are caused by a failure of the plumbing supply material, while 18% are caused by frozen pipes. Toilet, washing machine supply line, and water heater failures are also common causes.

Does full coverage cover water damage?

A common question is whether full coverage insurance covers water damage. There are a couple of issues to tackle here. First, “full coverage” is not an official insurance term, although many people use it informally to refer to robust coverage. Second, as discussed in the previous section, there are distinct types of water damage, and some may be excluded. Therefore, whether or not a policy covers water damage depends on the specifics of the loss and the policy language.

There are two types of insurance policies:

  • A named-peril policy covers only losses caused by the perils that are listed in the policy. All other perils are excluded. 
  • An all-risk policy covers all risks that are not specifically excluded in the policy language. The name is something of a misnomer because it does not actually cover “all” risks. 

To determine if your water damage is covered, first look to see if you have a named peril or an all-risk policy and determine which causes of loss are specifically covered or excluded by your policy language. While all property insurance policies are different, below are some typical loss scenarios.

Causes of water loss that are commonly covered under most policies:

  • Accidental and sudden damage from a water source inside your building, such as a burst pipe.
  • Damage from wind-driven rain.
  • Water damage caused by roof damage, including ice dams that build on the roof.

Causes of water loss that are typically excluded under most policies:

  • Flooding caused by outside sources, such as a storm surge or heavy rainfall. You need to purchase additional coverage if you want insurance for this loss.
  • Sewer backups are typically excluded. However, you may be able to secure sewer backup coverage by adding an endorsement to your policy.
insurance water damage coverage
Accidental and sudden damage from a water source inside your building is normally covered in a standard insurance policy

Limited water damage coverage: what is not covered?

We’ve already discussed how flood and sewer back-up losses are typically excluded. Other losses related to water damage may also be excluded under your policy.

Mold may be covered if it is caused by a covered peril. This means that if mold is caused by a burst pipe, you may have coverage. However, if mold is caused by a storm surge, you may not have coverage unless you have flood insurance policy.

Water damage to contents is likewise covered, but only if it is caused by a covered peril.

Losses that result from normal wear and tear are excluded. Furthermore, water damage caused by a failure to perform necessary maintenance or by neglect may also be excluded. It’s important to monitor your property for signs of leaks and water damage and to make necessary repairs in a timely manner. 

Purchasing Flood Insurance

Flood damage is not covered under a standard property insurance policy. Many property owners incorrectly assume that they will be covered if a flood occurs. According to the Consumer Federation of America, only about 20% of the homeowners impacted by Hurricane Harvey had flood insurance.

Flood insurance is available through the National Flood Insurance Program (NFIP). According to FEMA, coverage is available even in high-risk areas, but property owners in other areas may also be smart to secure coverage since about 40% of all NFIP claims come from areas with a low to moderate risk of flooding. Additionally, coverage is not just for homeowners. Coverage is also available for condominiums, apartments and commercial structures. You can also purchase private flood insurance.

How to avoid water damage on your property

Water damage is a major source of property damage, so it’s important to be take control of loss prevention and coverage.

  • Review your policy to make sure you understand what types of water-related losses are covered.
  • Consider adding a policy endorsement to cover sewer back-up damage.
  • Consider purchasing flood insurance. Use an online tool like Risk Factor to check the risk of flooding at your property address.
  • Make sure you and your tenants know how to shut off the water quickly in case there’s an emergency.
  • Routinely check the functionality of water shut-off valves in bathrooms, kitchens and laundry rooms and replace them as needed. 
  • Consider installing smart leak detectors to monitor for hidden leaks. You can also monitor your water usage. If it goes up, you may have a leak. 
  • Maintain your roof and watch for signs of ice dams.
  • Prevent frozen pipes. You may need to add insulation to protect vulnerable pipes in cold climates – especially in crawl spaces, attics, and outer walls. When the temperature plummets, provide your tenants with tips on how to prevent frozen pipes, such as the advice provided by Consumer Reports.

Is your property protected against water damage? Honeycomb offers fully customizable landlord insurance to you manage water-related risks and other threats.