Does Home Insurance Cover Water Damage?

flood damage

While June 1 is the official start of hurricane season in the Atlantic, the year’s first tropical storm has already passed through the Gulf states. Couple that with last year’s historically destructive storm season, and it’s no wonder people have questions about how their homeowners insurance handles water damage. (You can read about how Kin handled Irma damage for our clients last year.)

Here’s an overview of what your homeowners policy covers – and what it doesn’t – when it comes to floods and water damage.

What’s Covered: Water Damage that Starts Inside Your House

Generally speaking, if you have a homeowners policy written on form HO-3, the insurance offers coverage for two types of water damage:

  • Water damage that originates inside your home. Burst pipes and leaking or overflowed appliances are the two biggest culprits of this type of damage. They can wreak serious havoc, often damaging entire sections of a house, and replacements can be expensive.
  • Water damage that results from covered property damage. HO-3 policies cover damage from “fallen objects,” so if a tree branch collapses your ceiling and then it rains for three days, your homeowners insurance can usually cover for the water damage, because it was enabled by the covered fallen tree branch. (Ditto for water that gets in because of other types of covered events.)

There’s a big caveat here, though: this coverage exists, as we mentioned, if your homeowners insurance is written on an HO-3 policy. If you’ve got coverage on form HO-1 (also called a “named perils” policy) or HO-2, you may not enjoy these same protections.

If you’re not sure which type of coverage you have, take a look at your policy. If it’s not on an HO-3 form, consider calling your agent to upgrade or applying for a new policy online.

What’s Not Covered: Water Damage that Starts Outside

Nearly all standard homeowners insurance policies exclude coverage for floods, which insurance companies consider to be water damage that starts outside your home.

If this is a surprise to you, you’re not alone: one study found that 56 percent of homeowners mistakenly believe that their homeowners policy offers flood protection.

So what does an insurance company consider a “flood?” Any of the following:

  • Rising waters, whether from unusual rainfall or because of backed up storm drains in your area.
  • Rising mud from similar causes.
  • Water that flows into your home because of a malfunctioning municipal sewage system.

Flood coverage isn’t just for homeowners in designated floodplains, either: more than 20 percent of NFIP claims come from homeowners who live outside these areas.

The reasons are complex, but one cause could be that NFIP’s maps of floodplains are notoriously inaccurate. Another possible cause? Climate change. As serious storms increase in frequency and severity, flooding will be the new normal for more and more Americans, whether because they’re in a low-lying area or because the local storm drains aren’t able to keep up with the rainfall and debris.

A Special Note on Flood Insurance for Florida Homeowners

One final consideration for homeowners in Florida: while wind damage from hurricanes is covered by standard homeowners policies, it may be subject to a special hurricane deductible. In other words, if you file a claim during a hurricane, you may be responsible for paying more than your standard deductible toward repairing that damage before you’re eligible to collect funds from your insurer.

That’s one way insurance companies manage their risk during times of high claim frequency.

The bottom line: If you have only standard homeowners insurance, you’re probably not covered for flood damage. If you’d like flood insurance, your Kin representative can help you secure coverage.