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Is a Leaky Ceiling Covered by Insurance?

Homeowners insurance coverage for water damage is a gray area. There are many circumstances to consider and variables to weigh. So, a simple answer to a complicated question is, “Yes and no.”

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1 in 15 Homes are under insured

While most policies contain provisions for water damage done to the interior of a home, not all circumstances will warrant the insurance to pay for the water damage. If you have tried to keep your insurance premium low by purchasing a discount policy, or if you customized it by taking out certain coverages, then you may have cause for concern.

A less expensive policy is not always your best bet. You may be setting yourself up for some hefty costs in the future.

Water damage is two of the four leading causes of home insurance claims. While the two are separate events, weather-related and non-weather related, neither of these will determine in itself whether your policy will pay out a claim when filed.

Each will be looked at on a case-by-case basis to see what caused the leak to start. Then the insurance company will make its decision to cover or deny your claim.

What is water damage?

Water damage involves a water incident where the water hits your home before it touches the ground outside. In insurance company terminology, this means that the water incident most likely began from the air or from within the house.

This type of water damage is usually covered by a homeowners policy.  Internal occurrences, such as a ceiling leak, broken pipe or other plumbing issues may qualify for coverage under a basic policy. External things like rain, wind, and ice are could also qualify. The circumstances surrounding the incident will determine if coverage will be extended to a particular claim. Weather-related

  • Wind
  • Hail
  • Ice and Snow
  • Rainstorm

Non-weather related

  • Toilet, sink, or tub overflow
  • Washer or water heater explodes
  • Large water spills
  • Pipe burst

When water damage is not covered

There is a fine line when it comes to coverage for water damage. Sometimes you will have a level of coverage even when an overall incident is not covered. With that thought in mind, let’s first, take a look at what is NOT covered. Most of these incidents deal with keeping your home maintained properly.

  • Any flood disaster would not be covered under a basic homeowner’s policy.
  • If you have a sewage backup that causes flooding within your home, you will not be covered. This can be from drains or a sump pump. This is especially important if you live in a two-story building and the upper floor has the backup.
  • If you have a leaky roof after a rainstorm, you will most likely not be covered. This would be considered a routine maintenance issue.
  • A slow dripping leak from a pipe or hose that is not fixed promptly will be denied coverage. If it is not “sudden or accidental,” then you will not have coverage.

Nothing can help a denied claim from a maintenance incident. This is why it is essential that you have an inspection of your home done regularly by a professional. Of course, there are exceptions to the rules.

For instance, if the leak was behind a wall and you didn’t notice it until it seeped through or under the floorboard, then you should be covered. But if there is evidence that it has been there for a while with no attention, then you won’t be covered. As long as you prove that you made an effort to take care of the issue as soon as you found it, you will be fine.

If a storm damages your roof or a tree limb falls on your roof during a storm and your roof begins to leak, then you should be covered. It will not be covered if the damage is not dealt with and the leaking persists, causing further damage. When it comes to floods and sewage backups, there are two policies you can purchase to help with coverage a basic policy lacks.

Flood Insurance

Remember, water damage is water hitting your home first before hitting the outside ground. Flooding is water hitting the outside ground first before hitting your home. Since flooding is the most common disaster as well as most costly, it is wise to purchase a flood insurance policy. No matter where you live, 20% percent of flood claims come from outside of the floodplain. If you do not have flood insurance, then you are on the hook for any damages that could arise.

Sewage Backup Insurance 

Most people are unaware that the homeowner is responsible for the upkeep of the sewer system between their home and the main line. If the pipes were to become clogged, causing a backup, your basic policy would not cover your claim. This will cover drains, sewers, and sump pumps. If you purchase a sewage backup insurance policy, you can have the added protection to make repairs should you have an overflow situation. Again, this policy should be a must for someone who lives in a two-story home.

When water damage is covered

Keep in mind, just because your incident is not covered, that doesn’t mean you are unable to file a claim. You may still have damages that will have coverage. Situations may include: 

  • If the water damage is caused by a burst pipe or failed water heater, you will have coverage. This is known as “sudden or accidental.” It will be covered by your basic homeowner’s policy.
  • If you have a roof leak that is not covered due to lack of maintenance, your personal items inside the home could still be covered if that event causes damage to them.
  • If you have a pool and it overflows due to a rainstorm or fallen tree, the damage the overflow does to your home will be covered. However, if damage is from a flash flood, it will not.
  • If you have an overflow of the sink, tub, or toilet that is NOT caused by backup, your policy will cover your damages.
  • If you have a large fish tank and it cracks and spills, it will cover damages to your home.

There are factors insurance companies use to determine if an incident will be covered or not. Here are two of the most common:

Sudden and Accidental

This insurance term means that the incident happened without warning. There were no long duration circumstances that led up to the damage in the claim. A pipe bursting due to a hard freeze is considered sudden and accidental.

Negligence

This insurance term means that the owner either did not make repairs that he or she knew needed to be made, or that they did not take the necessary time to inspect their home to catch these needed repairs early. A ceiling caving in due to a leak you had a pot under the last three months is considered negligence.

Take steps to ensure you're insured

  1. Know your policy.

When you purchase a homeowners policy, know what it covers and what it doesn’t. Not all policies are the same. Avoid discount policies. They could have larger holes in coverage than on the roof you will eventually have to claim. Also, never assume you are covered for an incident. Ask questions if you are unsure of a limit or if a coverage description seems vague.

2. Know your home.

If you are buying a new home, don’t automatically assume that everything is in order. If it has been lived before, don’t take the previous owner or tenant’s word. Have it inspected when you have your appraisal done in either case. Also, examine things like the flood plain for the area around the house. Make sure the neighborhood has adequate drainage.

3. Know your options.

Ask your agent about flood insurance and sewage backup insurance. If you do not have these two policies, then your water disaster may not be covered, and you will be responsible for the costs of repairs and replacing your belongings.

4. Know the risks.

Have your home inspected every year, or after a major storm hits the area where you live. Wind, rain, hail, and blowing objects can cause unseen damage. When you don’t routinely inspect your home, then you may not see the damage done until it’s too late.

5. Know the causes.

Become familiar with the things that have caused others to have a lack-of-insurance nightmare. For instance, if you have a gutter lining your roof, understand that they do not clean themselves. Leaves and other debris can clog them, and your roof will not properly drain, thus causing the roof inside to leak eventually. This would not be covered under a homeowners insurance policy.

Final thoughts

When shopping for coverage, it’s a good idea to get into the details and know what is covered and what is excluded. Keep in mind that home maintenance is your friend, even if you have to call in a professional to inspect pipes, your roof, and anything that could lead to an incident. It will cost you less to fix a defect now than to wait and let additional damage occur.

Waiting can cost you hundreds, if not thousands more in repair, and most likely come out of your pocket.