Water is the new fire. It’s not just a thing we say to our clients, it is the truth. Where insurance claims used to be dominated by fire, now we are in a position where more than 60% of claims placed on property are for water, while around 25% are for fire. So what do you need to know about water? There are a few items of importance to note regarding water damage:
1) How did the water enter your home?
Water isn’t a singular form of loss and can come from many different facets. Water can enter from a burst pipe, through the sump pump, through the sewer line, seeping from appliances, through the roof during a rain, and the list goes on and on. Further, when did it enter the premises, and how long has it been entering the house? Depending on how or when the water got in will have implications on whether the loss is covered. If you were away on holidays during the winter and your furnace went out, did you have a capable person enter your property often enough to qualify for coverage, or will you be out in the cold upon arrival?
So the question isn’t whether there is water, but how did it get there. Barring certain extenuating circumstances, there will not be coverage available for water entering through the roof ever, as coverage cannot be purchased for this, same with seepage through basement walls. Both of these are issues that have a basis in maintenance issues rather than sudden & accidental issues. This is also the case with water continually leaking from home appliances. Water will only continually leak due to maintenance or fault installation issues.
2) Flood: Insurance vs Personal Definition
The word flood means something different to you or me than it does to an insurance company. To you or I flood may mean just any water on the floor. An insurance company, they have no less than 4 definitions for water on the floor: water escape & rupture, overland water, sewer backup, and seepage. And the definition of flood is typically something that cannot be covered. Even at the very base if we think of what a flood is it is water accumulating in a location that it typically would not accumulate in, whether by rain or overflow. To an insurance company, that explanation is what they consider “overland water”, where flood is usually associated with saltwater.
3) So… what am I covered for then?
Long story short, your policy is going to be different depending on what you have elected to have covered and we cannot definitively say what you are covered for without looking at your cover page and wording booklet. For instance, if you have fire insurance only, which is a very bad policy, there would be no coverage for water damage at all. But your typical home insurance policy will, at the very least, provide coverage for water escape & rupture. This is water that escapes from a pipe or water container when it bursts or overflows from a water container (like a tub or a sink). What your typical policy will not have is sewer backup as automatic coverage.
4) Optional extras for water coverage
So, your standard home insurance policy will not have an automatic inclusion for sewer backup or overland water. What now? Not to worry. Most companies will provide coverage for sewer backup (provided you haven’t had that issue in the past, or, if you have, you have taken measures to prevent it from happening again), and some are even starting to offer coverage for overland water. This is a major shift in the past few years, at least for Saskatchewan insurers, as these were never offerings in the past. The cost is subjective to location, as certain areas are more prone than others, with some areas not being able to get insurance for these things, but we’ve seen a step in the right direction. Some companies place limits on the amount of coverage, while others will not limit you other than based on your building value.
5) When did the water enter the home, and how bad is the water damage?
A standard policy will never cover damage from mold, rot, and a few other preventable issues. If there is rot in the wood, then the water has been there a long time. If there is mold, the water has been there a long time. In these cases, it is generally understood that the homeowner should have been aware of what was happening in the home and taken measures to prevent it from becoming worse. While sometimes it may be impossible to have known there was an issue, it is generally best practice to check your basement/crawl space at least a few times a year to see if there are any issues, same thing with the attic! Your roof is your first line of defence against water entering your home during a rainfall, after all, it’s a good idea to ensure proper maintenance!
These are a few important notes on water damage in your home. There are certainly more; this is not meant to be a comprehensive list, just something to get thoughts rolling about what flood actually is for insurance purposes. We get calls about flooding regularly and want to help you out by providing some knowledge of why we ask the questions we ask afterwards. So flood is not what happens when water comes from the pipes, or through the sewer system, or even from a heavy rainfall! All of these have separate terms with separate definitions and levels of coverage.
Is Your Home Damaged Due To A Flood?
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This is a general overview. There are many different insurance companies, and there are always differences in insurance policies. For specific details on your policy and coverage, we recommend that you contact your agent or broker.
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