Inside This Article:
- A homeowner in Oklahoma City incurred $22,000 in damages after a water main break flooded her basement.
- The owner had no coverage for the damage under her Homeowners Insurance policy and could not get assistance from the city.
- Many standard Homeowners Insurance policies exclude water damage from sources outside of the home, such as water main breaks, but optional coverages are available.
- Water damage is the leading cause of property damage claims in Canada.
- Regular home maintenance and upgrades like automatic water shutoff devices can help homeowners avoid water damage losses.
An Oklahoma City homeowner was surprised with $22,000 in out-of-pocket expenses after a water main break flooded her basement and destroyed her air conditioning and heating system, water heater, and more. After paying for cleanup and restoration services and replacing the appliances, the homeowner learned that neither her Homeowners Insurance nor the city would help cover the costs, KOCO 5 News recently reported.
The city denied responsibility for the February water intrusion after conducting a dye test, telling the homeowner that public works personnel were unable to determine how the water reached her basement. The homeowner had reportedly not purchased optional coverage on her Homeowners Insurance policy for water damage from outside of the home’s plumbing system.
“Many homeowners do not realize that most line services from the street to their house that are provided by the city/county or utility companies are typically not covered under a standard Homeowners Insurance policy,” said Nick Tatman, Senior Underwriter, Personal Insurance, Burns & Wilcox, Morehead City, North Carolina. “It is important for insurance agents and brokers to educate homeowners about that and explain the separate coverages that are available to purchase.”
Many homeowners do not realize that most line services from the street to their house that are provided by the city/county or utility companies are typically not covered under a standard Homeowners Insurance policy.
Facing this type of uninsured loss can be devastating for homeowners, both financially and emotionally, said Oksana Chernyetsky, Senior Underwriter, Personal Insurance, Burns & Wilcox, Sacramento, California.
“It is likely something that they never thought they would have to face,” she said. “This situation is a perfect example of the importance of being properly insured and adding additional coverages — and a reminder for insurance professionals to be thorough with explaining these coverages.”
Water damage claims common, costs rising
Water damage is the leading cause of property damage claims in Canada, accounting for about $1.7 billion per year and representing about 50% of paid claims in 2023. In January of 2024, a deep freeze in Western Canada that caused widespread water damage from frozen and burst pipes led to $180 million in insurance payouts, 70% of which were personal property claims, Canadian Underwriter reported.
“Water damage losses are very common and can be quite costly,” Chernyetsky said. “If there is major damage where you have to replace floors, cabinets, or structural components, it can be tens of thousands of dollars. The cost of building materials and labor has also increased, which increases the cost of repairs.”
If there is major damage where you have to replace floors, cabinets, or structural components, it can be tens of thousands of dollars. The cost of building materials and labor has also increased, which increases the cost of repairs.
Standard Homeowners Insurance typically covers accidental water intrusion from within the home’s plumbing system, including burst pipes, appliance leaks, accidental overflow, and more. These losses are more common in secondary homes, where leaks can go unnoticed for extended periods of time while the house is unoccupied, Chernyetsky noted.
“You can end up with damage to cabinets and expensive hardwood flooring, and as a result be dealing with mold damage and cleanup, replacing cabinets — all of those things add up,” she said. “If a leak continues for days or weeks, there can be situations where you would almost have to rebuild the home from the inside out.”
These losses are often the most significant, Tatman added. “The biggest claims that I have seen are unoccupied secondary homes,” he said, pointing to one claim in which a leaking ice maker damaged four stories of a vacation home and cost hundreds of thousands of dollars to repair. “If it is not your primary home, those losses can get really big because you are not there 24/7.”
Closing water damage insurance gaps
While weather-related water damage losses generally require a separate Flood Insurance policy, coverage for water intrusion from other outside sources — such as water main breaks, sewer backup, and sump pump failure — can usually be added to Homeowners Insurance policies with a Water Backup Endorsement. Additional enhancements such as Service Line Coverage and Equipment Breakdown Coverage may also be recommended.
“These are usually fairly inexpensive to add on, depending on the carrier,” Chernyetsky explained. “It is a great way to protect yourself from unexpected losses. As the cost of living goes up and everyone is trying to save money, homeowners may decide against adding those coverages to their policy, but that could be a costly mistake.”
The Water Backup Endorsement is “a no-brainer” for homeowners, who may not realize these incidents would not be covered by a standard Homeowners Insurance policy, Tatman said. They should also ask about how other types of water intrusion are covered. “Always talk to your agent or broker,” he said. “Ask them, ‘What would happen if we had a slow leak? What about mold growth?’ That could be another additional coverage to consider.”
These conversations can help homeowners avoid facing an uninsured loss, Tatman said, but they often do not occur when shopping for Homeowners Insurance online. “Having a trustworthy retail agent is especially important. You cannot get that from an app,” he said. “They have seen the claims, and they know the critical coverages to advocate for to help protect the homeowner from a potentially devastating out-of-pocket repair.”
How to protect against water losses
Homeowners can help protect against water-related losses by regularly inspecting and maintaining their plumbing systems and installing water leak detectors. As water losses increase, some Homeowners Insurance carriers are applying stricter guidelines on outdated plumbing and appliances and even requiring water leak detection systems, Tatman said.
“One good example is a product by Moen called Flo, which connects to where your water main comes into the home and detects anytime you have a leak or a drop in pressure,” he explained. “It can automatically shut the water off and notify you on your cell phone. These devices are relatively cheap and can save you from the huge headache of a big water loss.”
[Water leak detection systems] are relatively cheap and can save you from the huge headache of a big water loss.
Homeowners can also check under their sinks for slow leaks, ensure there is sufficient caulking around toilets, and monitor their water bills for higher-than-average usage, which could point to “hidden” leaks, Chernyetsky said.
“Water losses are really on the rise right now and insurance carriers are paying a higher dollar amount for these losses. For the homeowner, water losses can actually diminish the value of their home. It is like a chain reaction,” she said. “The mentality we have at Burns & Wilcox is to protect the homeowner from dealing with a loss. They should pay attention to the policy forms, listen to advice from the insurance professionals, and ask questions. Accidents and losses happen, unfortunately, and it is always better to be prepared.”
[Homeowners] should pay attention to the policy forms, listen to advice from the insurance professionals, and ask questions. Accidents and losses happen, unfortunately, and it is always better to be prepared.
