Will My Homeowner’s Insurance Cover Damage from a Leak?

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Many policyholders get confused about insurance coverage when they have a water leak in their home. Water damage claims are one of the most frequently claimed losses. Nonetheless, many policyholders are unaware of the exposure without coverage they face when water penetrates their home from the outside. In most cases, a critical distinction between a covered and a non-covered water leak boils down to the origin of the water.

For example, in the typical homeowner insurance policy a water leak that originates from outside, such as flooding, is not a covered peril. However, a water leak that originates from inside of the home, like a sudden broken pipe, is a covered peril. However, when it comes to water leak insurance claims the timing does matter.

In addition to water leaks that originate outside the home operating as exclusions, insurance companies are also likely to deny a claim when indoor water damage happened gradually instead of suddenly. An example of a non-covered loss when the water leak originates inside the home is when a pipe drips slowly for many years resulting in a rotted floor beneath the pipe. The insurance carrier will likely deny that claim for what they identify as gradual damage due to lack of maintenance. Insurance policies are specific contracts that typically cover only the unexpected and sudden events. Insurance policies do not include a homeowner’s lack of attentiveness to all of the corners and nooks in their house that might have a water leak.

Additionally, examples of regular maintenance issues that often get excluded from insurance policies include deterioration of roof shingles, flashing, or tiles. Also, rotting or corrosion of pipes or tubing that leads to a water leak in the home typically is an excluded loss.

Another area where a policyholder gets caught off guard when it comes to a water leak that originates from inside the home but doesn’t get covered is when a water leak results from a shoddy repair. For instance, if a homeowner performs work that isn’t compliant with housing codes, then an insurance carrier might deny a water leak insurance claim. Similarly, if an unlicensed contractor does a job on a policyholder’s home that’s shoddy, then an insurance company could deny a water leak claim.

One of the most frequent areas of frustration for claimants is an unexpectedly denied claim. The most typical instance where this occurs during the claims process is when a policyholder believes they had a sudden event that caused a water leak, but it turns out a gradual deterioration event caused the water leak. For that reason, homeowners should get familiar with their insurance policy covered losses and exclusions, and if a policyholder lives in flood-prone area, they should consider purchasing flood insurance.