Smart Quiz: Water Damage Is NOT Covered by a Standard Homeowners Insurance Policy When…
a. A Rainstorm Causes Floods
b. An Old Pipe Causes Damage
c. A Pool Overflows
d. All Of The Above
Answer: All Of The Above
A commonly misunderstood aspect of many homeowner policies is coverage from water damage or flooding. While most standard policies offer limited coverage for water damage, none cover flooding. Here’s what you need to know:
Water damage is only covered when it can be defined as “sudden and accidental.” A homeowner policy may cover the damage caused by a burst pipe or appliance malfunction. It will never cover water damage caused by a long-term ongoing issue for a lack of maintenance on, let’s say, an old rusty pipe.
It’s important to check the homeowner policy for exclusions related to water damage, especially sewer damage. The insurance company may also have additional coverage options available at an extra cost.
The definition of a flood includes the overflow of a large body of water. This may include rivers and streams, but can also include flooding caused by excess runoff after a heavy rain or snowmelt. This also includes flash flooding, floods caused by large amounts of water that overwhelm drain systems, and flooding caused by hurricanes. Even a neighbor’s above-ground pool bursting can cause a “flood” that extends to your property.
Flood insurance is available through the National Flood Insurance Program and most insurance agents can help their customers apply. According to the NFIP, as little as one inch of water can cause up to $25,000 in damage to a home, making flood insurance well worth the investment. Flood insurance does cost more if the buyer lives in a high-risk flood zone, but anyone can purchase a policy – even if they live in a zone that is not usually prone to flooding.
Don’t wait until a storm is on the horizon to ask about flood insurance. There is always a 30-day waiting period from the time of application until a flood insurance policy goes into effect, very few exceptions to the rule. The NFIP may also put a hold on accepting new applications when there is an impending storm. Speak to an insurance agent about available options sooner rather than later.
~Here’s to your financial health!
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