The insurance industry has a long history of being reluctant to pay for claims related to water damage. Claims of water damage can be traced to a number of causes. We will address the causes and the typical insurance response to these events. We will address risk management for water damage exposures.
Flood, surface water, waves, tidal water, or the overflow of a body of water, all whether driven by wind or not, this includes spray that results from these whether driven by wind or not. This is the exclusion language that would exclude coverage for surface water flooding, wind driven rain, and storm surge related to a hurricane. Your standard insurance policy excludes these events. You need to have a flood insurance policy to cover these events.
We have previously published a number of articles on flood insurance and the data behind this hazard. Check these links out.
Flood Insurance Information You Need to know
Flood Insurance What do I-Need
Water or waterborne material that backs up through or overflows or is discharged from a sewer, drain, septic system, sump pump or related equipment is excluded from property coverage. Your insurer may offer a sublimit for back up of sewer and drains and you need to evaluate your exposure to loss from this type of event to set an appropriate limit. Many policies offer a small, $25,000, limit that is quickly exhausted by a minor event. Evaluate your interior finishes and set a limit that can cover your expected loss.
Water below the surface of the ground
This includes water that exerts pressure on or flows, seeps, or leaks through or into a building, structure, sidewalk, driveway, foundation, swimming pool or other structure. This is another type of water damage that is commonly excluded by a standard property policy. You may be able to obtain a limited water damage endorsement to cover this exposure. Just as the sewer back up endorsement has a sublimit, this endorsement will also offer a sublimit. Select the amount of coverage based on the exposed values.
Fungi, Wet Rot, Dry Rot and Bacteria
Small leaks that persist over time can be caused by improper construction, deteriorated caulking and sealing can cause water damage. This type of water damage can cause structural damage via wet and dry rot and expose you to health hazards from mold and fungi. Insurance policies have excluded coverage for this type of damage. Most policies will offer a small sublimit for this type of damage. It is often more economical to offer a small sublimit than to exclude the peril. The sublimit reduces the exposure to litigation for the insurance company.
If coverage for this type of event is included in your policy, the insurance company will pay for the resulting damage from the leak but will not repair the pipe or system that was leaking. The leaking pipe must be a sudden and accidental event that was immediately noticed. Damage from leaks that persist for more than 14 days are excluded from property coverage.
Water Damage Risk Management
Puck style detectors are placed near suspected leak sources and report when they detect water. Other technology of cable systems that can be placed in or around equipment and provide detection along the linear length of the cable. These systems generate an alarm signal that can be a locally supervised or if connected to the internet provide a text message or other off premises notice. Some systems can close a valve on the system or specific appliance to shut off water.
A second technology is a water monitoring system that learns what are typical water flows for your property and alerts you when an abnormal flow is detected. These systems are routinely configured to shut off the water valve to prevent further damage.
Having the right tools and equipment to respond to a water damage event can significantly reduce the amount of damage. Water extraction equipment, mops, squeegees and other clean up equipment can be staged and ready to use.
Shutting off water immediately upon discovery of a leak is an immediate loss reduction step. Knowing the location of each shut off valve and exercising those valves to be sure they can be operated is a low to no cost risk reduction process.
The Driehaus Difference
We understand the reluctance of insurance companies to absorb water damage claims and expenses. We also understand that you need protection from the economic catastrophe that these events cause. We know the various company forms and available products to address this exposure. We can also help with identifying carriers who offer discounts or cost sharing for water detection system. This is part of your insurance program that is not easily arranged in an online environment or when you only way for what you need. Most buyers do not understand the specific language of insurance and miss getting the right coverage. Call us at 513-977-6860 or contact us via our website driehausins.com so we can be your insurance advocate.