Water Damage Clause

A water damage clause is a clause in a property-casualty insurance contract. A water damage clause states that the insured is covered for water damage that occurs for specific reasons, such as frozen pipes or sewer backup. Water damage clauses are therefore usually included in most homeowners and renters' policies.

Water damage can be quite expensive to fix. For this reason, most homeowners and renters are willing to pay a higher price for a policy that includes this coverage. However, water damage clauses usually exclude damage from floods, for which a separate rider or policy must be purchased.

For example, let's assume a homeowner's pipes freezes and bursts on an especially cold winter night, spewing water all over the garage and ruining the drywall. The homeowner's insurance policy has a water damage clause that covers this damage, so the homeowner files a claim and their insurance company reimburses them for the cost of repairing the garage.

The following spring, a big storm produces six inches of rain in two hours. The ground is saturated and the streets flood. Water seeps into John's basement, ruining all the furniture, carpeting and walls. John's insurance policy has a water damage clause that says it doesn't cover damage due to flooding, so in this instance, the insurance company does not reimburse John for the cost of repairing the damage.

The water damage clause is a key aspect of a homeowner's insurance policy. As such, it's extremely important to read the full policy and understand the protection that's included and what's not included when it comes to water damage. A homeowner may want to consider purchasing extra coverage if a property is vulnerable to certain types of water damage, especially flooding.

• Understand when it makes sense to hire a public adjuster. Public adjusters help policyholders maximize their insurance claims and negotiate with the insurance company on your behalf. It's a good idea to hire a public adjuster if the disputed amount is over $10,000. Most public adjusters have previously worked for insurance agencies and have handled water damage claims on both sides of the negotiating table. They can provide a tremendous service to a homeowner in negotiations with their insurance company.
• Understand the difference between water damage and flood damage. Water damage is often most frequent type of damage reported in the home insurance industry, but it is different from flood damage. Water damage can be caused by problems like frozen pipes, broken pipes, poorly-maintained appliances, sewage backups, leaky roofs, wind driven rain, and many other problems. Water damage is typically covered by home insurance policies. Flood damage is not.