Many insurance shoppers often overlook some of the most important details on their homeowners insurance policies; water coverage is one of the details.  Even though your insurance agent may have told you that water damage is covered, water damage coverage is often misunderstood.  As a result, people file claims to cost time and money.  This blog post will explain the differences between the different types of insurable water losses so that you are more informed the next time your shop for your homeowners insurance policy.

Flooding

Each homeowners policy I reviewed specifically excludes damage caused by flood.    Flooding is defined as "surface water, waves, tidal water, overflow of a body of water, or spray from an of these whether driven by wind; and released of water held by a dam, levee, or dike or by a water or flood control device; water below the surface of the ground…"  In other words, if the water comes from an external source outside your home, it is not covered.  The good news is that you can still obtain coverage against floods.  Flood Insurance policies are managed by the National Flood Insurance Program.  In fact, it is wise to purchase flood insurance even if you live areas that are not prone to flood. 

The folks in El Paso learned the lessons of flood insurance the hard way.  In August 2006, El Paso was hit with a torrential rain that resulted in massive flooding.  Luckily for El Paso residents, President Bush declared a federal emergency.  In this case, even though flooding is not expected, you can learn something from the folks in El Paso.  Residents, that had flood insurance in the desert, were "grandfathered into their low risk rates.  However, everyone that did not have flood insurance now have to pay high risk rates. 

Suddent and Accident Discharge or Overflow of Water.

Water leaks come in all shapes, sizes, and locations.   In fact, the cause of your leak and policy type are very important. Most homeowners policies will cover the "sudden and accident" discharge of water.  This means that if your hot water heater breaks, your homeowners insurance policy will probably cover it; unless your agent does something tremendously wrong. (like writing the wrong type of policy)

Slow and Continuous Leaks

The other type of leak that causes confusion is the "slow and continuous" leak. Most homeowners policies exclude "slow and continuous" leaks.  The Texas HO-B policy covers slow leaks.  So if you have that type of policy, you're in great shape when it comes to water damage.  On the other hand many carriers have updated their policies to include leak coverage through optional endorsements. Unfortunately, many companies have limited coverage resulting from slow leaks.  So, if you find one, make sure you report it.  The state of Texas has a great resource to compare your policy to the top carriers in Texas.  Visit http://opic.state.tx.us.

Foundation Water Damage

The last type of water damage is the infamous slab leak.  Slab leaks are normally excluded from the normal homeowners insurance policy.  However, insurance companies addressed the need to provide protection for slab leaks by introducing foundation water damage endorsements.  This coverage will generally provide coverage for access to a leaky pipe in or below your slab.  Beware, this coverage does not replace replace the leaky pipe.  Foundation water damage endorsements provide a specified dollar amount so your plumber can find the leak in  your home's foundation, but it does not replace the actual leaky pipe.  Now that tricky! 

There you have it!  Types of water damage coverages that you could come across in your quest to purchase homeowners insurance.  Remember, flood insurance must be purchased through a NFIP approved insurance provider, and your homeowners insurance policy may or may not cover leaks.  So, next time you're reviewing your homeowners insurance policy, make sure that your agent reviews Water Damage coverages and exclusions.  Remember, you never want to find that your policy is missing coverage you need at the time of a claim.

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