Does homeowners insurance cover basement flooding?
Even if you live in an inland area, flooding is a risk to all residential properties. While you may believe that your home insurance will cover basement flood damage, most policies exclude coverage for at least some types of flooding, including natural disasters. Many home insurance companies, fortunately, sell standalone policies and endorsements that can supplement your homeowners insurance and provide coverage for various types of flooding, including basement floods.
When does homeowners insurance cover basement flooding?
Basement flooding can be caused by a variety of factors. Some of these situations may be covered by your homeowners insurance policy, but not others. It is critical to review your home insurance policy to determine which perils are covered and which are not. Here is a list of common basement flooding scenarios that are typically covered by homeowners insurance.
Burst pipes
If your basement floods due to a frozen pipe or a broken pipe to your washing machine, the resulting damage is most likely covered by your policy. There are, however, a few caveats to consider. For your claim to be eligible, you must be living in the home and keeping it at a minimum temperature. In addition, if your insurer discovers that you have not kept up with pipe maintenance, your claim may be denied. In general, water damage caused by a burst pipe will be covered, but not the cost of replacing or repairing the pipe itself. That is a maintenance cost for which you are responsible as the homeowner.
Broken appliance
Assume your water heater bursts and you don't notice the flood damage in your basement until hours later. Again, unless the heater is poorly maintained and cared for, you should be covered by your home insurance policy. If the heater is very old and its age is the reason it broke, your coverage may be called into question. The same rules apply to a washing machine, refrigerator, or other basement appliances. It pays to practise preventative maintenance by ensuring that all appliances are in good working order and are kept clean.
Localized overflow
If your basement flood was caused by an overflowing basement structure, such as a sink or tub, you will most likely be covered as long as the overflow was sudden and accidental. However, if your insurer can demonstrate that the flood was caused by a recurring maintenance issue, your claim may be denied. So, for example, if your toilet regularly overflows due to a blockage that you haven't fixed, you might not get paid.
When does homeowners insurance not cover basement flooding?
Water damage to a basement is not always covered by standard home insurance policies, which may surprise you. If flood damage is likely in your area, you can usually add an endorsement to your policy that provides additional coverage, or you can purchase a separate flood insurance policy.
Flooding from a storm
If you live in a flood zone, your home insurance policy is unlikely to cover basement flood damage caused by a storm. If you live in a flood zone or have frequent flooding from storms, you should consider purchasing flood insurance through the National Flood Insurance Program (NFIP).
Most insurers will sell you an NFIP policy (though private flood insurance may be available), so ask your agent if you believe you need this type of coverage. If you buy a home in a flood zone, your mortgage company may require you to have flood insurance.
Sump pump backups
Flooding caused by a sump pump that fails or stops working is not covered by standard HO-3 policies. If you have a working sump pump in your basement, you should think about adding an endorsement to your policy to cover this type of mishap. Almost all homeowners insurance companies provide this coverage for a fee, but it is likely to pay for itself after a single claim.
Sewer backup
This one is a little more difficult. Assume you have a basement backup caused by your washing machine or another appliance. As previously stated, you are most likely covered in that case. However, if the flooding is caused by an external sewer backup, involving outside pipes that may or may not be on your property, it is unlikely to be covered.
This is another area where homeowners insurance companies provide an additional endorsement to your policy to add coverage. Because sewer backups can be costly, this is a good type of coverage to consider adding to your policy. This coverage is typically purchased in conjunction with the sump pump backup endorsement.
Seepage issues
If you have occasional or chronic water seepage into your basement, your policy is unlikely to cover it. Seepage can occur as a result of building a home on top of a high water table or from an older home with a cracked foundation. In most cases, your insurer will regard this as a maintenance issue and will most likely deny the claim.
Maintenance issues
If your flood was caused by a lack of maintenance on your appliances, pipes, or other items in your home, you will most likely not be covered. In other words, if your insurer can demonstrate that you were negligent in caring for your home and its contents, and that your negligence caused the flood, you will be out of luck.
Coverage options to consider for basement flooding
Don't give up if it appears that your policy will not cover a variety of situations. Although additional coverage comes at a cost, it is possible to carry enough insurance to financially protect your home and personal property against the majority of water-related perils. The following are the most common ways to supplement your insurance.
- Flood insurance: As previously stated, flood insurance is available as a separate policy, usually through the NFIP. If your home is in a flood zone or you have frequent flooding problems, it's a must-have addition to your existing coverage.
- Water backup coverage: This is an optional coverage that can be added to your primary homeowners policy. It is intended to protect you against water damage caused by a drain or sump pump backup.
- Service line coverage: Service line coverage is an endorsement that protects utility pipes, such as water and sewer lines, if they are damaged in a covered peril. This endorsement can be useful because utility line damage can result in flooding in and around your home.
- Contents replacement cost coverage: If you store personal items in your basement, consider adding a contents replacement cost coverage endorsement to your home insurance policy. It insures your personal belongings at their replacement cost (no depreciation), which means you can replace them after a claim by purchasing a newer model.