Does Homeowners Insurance Cover Leaky Basements?

does homeowners insurance cover leaky basements (3)

A leak in the basement can come in many forms – from a crack in the foundation plumbing windows or doors or even ceiling. But when it comes to leaks and wet basements, not all damage is necessarily covered by your home insurance. 

Your first question is probably to ask what insurance covers and what you’ll be expected to pay out-of-pocket. The answer will vary depending on your specific policy and the scenario surrounding the leak in the basement. Here are some tips for dealing with such a situation. 

If your home has a history of water seeping in and you’ve never had the issue repaired, you may be in trouble. Leaks continue to damage your home even if you can’t see the evidence of that damage directly. Once water finds a path into your home, it will come in again and again. At MJS Construction Group, we offer a wide range of duplex build.

If your home has previous evidence of leaks or has leaks that have gone unaddressed, your home insurance likely won’t cover the damage. You will be responsible for covering the costs of clean up and repair.

Damage due to a lack of maintenance is not usually covered by your home insurance policy. You’re expected to maintain your home as part of your insurance agreement. For example, if you’ve got a crack in your foundation and two inches of water seepage accumulates in your basement, you’re likely on your own to pay for clean up and repair. A foundation crack is considered a maintenance issue and won’t be covered by most policies.

To prevent having to pay a large repair bill, regularly inspect basement walls for cracks and each year double-check that the caulking around windows and doors is in good shape. (If the caulking is cracking or peeling in places, it’s time to remove the old and apply new caulking.)

Also, make sure your home’s gutters and downspouts are clear and working properly so water can move away from your home. Foundation seepage and leakage into your home usually occur when the water has a chance to sit or build up. To prevent this, make sure you complete your annual maintenance on your home’s exterior.

But what if the leak in the basement is due to a slowly leaking appliance? For example, some homeowners are unaware of a leak until evidence such as mould rot and a bulging ceiling show in the basement. At that point, they may call in a repair specialist only to find out their dishwasher has been leaking into the floor joists for half a decade, causing rot and severe damage. 

Some insurance companies will deny the claim because it was a slow ongoing leak. Other insurance companies might cover the claim because your policy covers these types of claims if the damage was hidden in walls beneath floors or above the ceiling. To determine whether you have coverage, check your policy’s seepage exclusion or talk to your broker for some guidance.

At this point, whether your insurance provider covers the claim or not, you will need to repair and fix the water seepage issue. Neglect to do this, and you’ll find your basement submerged yet again. Talk with a waterproofing professional to decide the best way to repair your problem. Remember, just patching a crack in the wall doesn’t fix the water seepage problem.

What is Homeowners Insurance, Anyway?

Before we talk about what your homeowner’s insurance will and won’t cover, it might be helpful to spend a few minutes on what it is and what it does. When we buy a home, we also buy insurance coverage to protect that home and its contents from loss or damage, with the most obvious reason being that we want to provide a comfortable and safe place for our family.  

Also, for most people, a home is our largest single investment, so we ensure it to protect our financial commitment. And, since very few of us can buy a home without taking on a mortgage, lenders require homeowner’s insurance to protect their investment in us.

So, how does it work? Most of us have a basic homeowner’s policy that covers all the disasters you’d expect it to fire, theft, falling trees. Most policies will cover any common loss that isn’t specifically excluded.   

You can also add coverage to your policy, called an “endorsement,” that covers specific losses, like burst pipes and mechanical failure of your sump pumps. Then there are those “exclusions,” things that your policy doesn’t cover, and common among them are flooding and water seepage that occurs at or below ground level.

Damage

Does Homeowners Insurance Cover Leaky Basements

Water damage caused by appliance malfunctions is typically covered under a standard homeowner’s policy, provided some evidence of damage to the unit. Water heaters, dishwashers, air conditioners and washing machines are common causes of water damage considered to be unforeseen and therefore covered under most policies.

What’s Covered

Damage to the structure and contents is typically covered; however, the appliance is not usually included in the policy. If damage has occurred because an appliance is merely worn out, as opposed to a broken one, the damage may not be covered under the insurance policy. 

Secondary damage, such as mould growth occurring from improper cleanup, is considered negligible and is usually not covered. Damage caused by a flood is not covered under most home insurance policies. According to State Farm, many homeowner’s policies also exclude damage from sewer and drain backups, including toilets, sinks, and shower drains. Damage from plumbing leaks may be covered if it results from water damage and not a line break. Damage caused by burst pipes may be covered, but mould growth caused by the water damage will not.

Renters

A landlord’s home insurance policy will cover water damage to the structure but not the renter’s contents. Renters can protect their possessions with rental insurance. Be sure water damage is specifically covered in the policy, and be aware some exclusions may apply.

Considerations

Maintaining appliances in proper working order, placing appliances in areas that will limit damage in the event of a malfunction and replacing old appliances can help protect the homeowner. Homeowners should also know where the main water shut-off valve is and how to use it.

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Are Basement Leaks Covered By Insurance: Internal Water Sources

Fortunately, basement floods from an internal source are almost always covered by home insurance.

Instances include:

  • Broken appliances- If a basement washing machine or refrigerator is on the fritz or has a break in the water supply line, water can seep slowly over time or flood the basement in what seems like an instant. Thankfully, home insurance considers this “sudden and accidental”, almost always covering the cost of repairs. The typical reason it’s not covered is when the insurance company can prove it broke because of lack of maintenance on your part.
  • Leaky water heater- A leaky water heater is likewise covered, except where they can prove negligence. Keep an eye on your appliances and maintain them well, and you ensure coverage.
  • Burst pipes- Any burst pipe, even ones that froze and burst, is covered by home insurance. Pipes freeze when the temperature drops, and the expansion of the water inside puts stress on the pipe and creates a burst situation, flooding your basement. You’re covered every time if you maintain the home with heat during the temperature drop and if you turn off the water before leaving on vacation.
  • Overflowing fixtures- Overflowing tubs and sinks are classified as “sudden and accidental”, saving you the headache of expensive repairs from the resulting floods.

Are Basement Leaks Covered By Insurance: External Water Sources

Homeowner’s insurance is frustrating. It’s there for you in a lot of ways but sometimes absent when you need it most. External water sources are rarely covered by average home insurance. And even flood insurance doesn’t cover every basement leak. If insurance classifies your water intrusion as groundwater, you can expect them not to cover it.

Despite what you might think, your insurance company isn’t doing this out of the meanness of their hearts; there are two very logical explanations for the lack of coverage. Your home insurance company is trying to keep premiums as low and affordable as possible, and not covering groundwater leaks is the best way. The two main reasons, as listed by American Insurance, are:

  • “Current construction methods require the foundation to allow water to drain away from home. Older homes may not have followed these methods, or due to improper grading, the shifting of the soil or past severe water events, water may find a path to begin collecting underground next to the home. If water intrusion through foundations were covered by insurance, then a homeowner would have no incentive to correct the problem. Covering these events would give rise to repeated claims after every periodic severe weather season.
  • Over time, every foundation settles, cracks, and eventually deteriorates. This “wear & tear” may require a homeowner to excavate around the foundation (and basement) to place drain tiles and patch/re-seal the foundation and basement concrete walls. Again, if this type of water loss were covered, then a homeowner would have no financial incentive to repair or improve their home.”

This can seem not very encouraging, but it is also very matter of fact. If you have a new home, keep it maintained, and if you have an older home, it’s time for some hardcore fixing. Homeownership comes with immense responsibility, and maintenance is the best form of protection against damage.

Basement leaks not covered by insurance include:

  • Rising water from a storm of heavy rains- You will need adequate flood insurance to protect you against damage from any weather event. When you purchase flood insurance, make sure you find a policy that covers both dwelling and contents. Most flood insurance policies cover possessions but not the structure of the home.
  • Sewage backup- Sewer system backups are not covered. But you can try DIY protection approaches like using a floor drain plug, standpipe, or overhead sewer.
  • Groundwater seeping through cracks- Cracks in your wall or foundation can let groundwater in, and groundwater is never covered by typical home insurance.

When Does Homeowners Insurance Cover A Flooded Basement?

There are numerous reasons your basement could flood. If any of the following happened in your basement, you would likely be covered if you had a standard home insurance policy.

Flood Caused by Broken Appliance

Suppose the washing machine, AC unit or refrigerator in your basement malfunctions and floods the entire room. The water damage is typically covered under a standard homeowners insurance policy. However, there is a chance that your insurer could argue that the damage resulted from a lack of maintenance. If they can prove the appliance broke because you hadn’t taken care of it for a while, they can deny your claim. A truly faulty appliance malfunction will always be covered, however.

Note that the cost of the new appliance itself won’t be covered under the claim. So, to be clear: the flooding caused by the broken appliance is covered, but you have to buy the new washer or unit out of pocket.

Flood by Leaking Water Heater

Damage from a leaking water heater is covered under the same provision as leaking appliances. Again, you must be aware of whether the water heater is leaking due to neglect or malfunction. If your insurer finds any proof the cause of the leak was poor upkeep on your part, your claim will be denied.

Freezing Pipes Burst

If one winter night the temperature drops and your pipes burst from the freezing water, your home insurance policy would cover the damage of that flood. Burst pipes from an AC unit, sprinklers and appliances are also covered if they freeze. The main condition is that you have to be living in the home while it was flooded.

The only exception is if it can be proved you were still maintaining the home with heat or turned off all the water systems—common when homeowners go away for a winter vacation. This is something you should consider if you have a secondary home in a cold climate.

Flood Caused by Overflowing Tub, Pool, Sink, Etc.

Does Homeowners Insurance Cover Leaky Basements

You may be surprised that if your basement is flooded due to an overflowing tub, pool, sink or any other receptacle for water, you would be covered by your home insurance policy. Such a calamity is considered “sudden and accidental”, and your insurer will foot the cost for replacing what was destroyed. So, if your child decides to fill the toilet in the basement with all the toilet paper in the house and proceeds to flush a bunch of times, home insurance will typically cover the resulting flood damage.

Unfortunately, there are also situations where if your basement is flooded, you would not be covered by a homeowners insurance policy. The following situations are not covered by a standard home insurance policy:

Rising Water from a Storm, Surge or Heavy Rains

Essentially, any flooding caused by nature will not be covered under your home insurance policy. For all rising water situations, only flood insurance can save your basement–and even then, coverage is limited.

Flood insurance covers certain objects in your basements like most personal belongings and appliances but typically won’t cover the structure, such as finished ceilings or floors. When you take out a flood policy, you must purchase both dwelling and contents coverage to get the maximum coverage for your basement.

The best defence against a flooded basement is a functioning sump pump that pushes the water out. Preventing a flood from occurring in the first place will usually be the cheapest and least disruptive option, especially if you have a finished basement. 

If your sump pump fails as well, there is additional “sump pump coverage” you can buy as part of your home insurance policy that ensures your basement up to $25,000 in case of pump failure. Of course, it would have to be a malfunction and not a result of the poor upkeep of the system.

Sewage Backup

If an external sewer system backs up into your home and basement, your insurance will not cover the resulting damage. Sewage backup can be one of the most costly disasters that can befall a home, and there are few ways for homeowners to recoup their losses should it happen.

Most home insurance companies offer an endorsement for sewage backup, and it is relatively inexpensive but only covers up to $10,000 worth of damage. That’s not enough financial protection in most cases. Sewage backup can easily cost hundreds of thousands of dollars to repair.

Water Seeping from Underground

This is a tough case for a homeowner to be in because this situation is generally not covered. After a period of heavy rain, the ground can become saturated with water, and that water can seep through the ground into your basement. Homeowners insurance companies do not consider this a coverable calamity. MJS Construction Group has the best range of home builders Melbourne services to help you create your dream house.

Flood insurance also won’t cover it unless the seepage is directly related to a flood in the area. The best defence against this disaster is to make sure the foundation of your home is solid and up to date on all inspections.

 

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