Water Damage Exclusions On A Property Insurance Policy

In my last blog post, I shared information on the water damage loss a client of mine suffered the week of the 4th of July.

Water damage claims can be tricky. Here’s what you need to understand about water damage when it comes to insurance coverage.

When your building and/or its contents have suffered water damage, it’s never a good situation. It’s more prone to happen if you have not been properly maintaining your building. Probably the two biggest characteristics of the building that apply to water damage claims are the roof and plumbing. If you have ever purchased property insurance for a building you own, or a space you lease, you are asked what year the building was built. If it’s over 25 years in age, insurance carriers typically want to know when the last renovation or update was made on the roof and plumbing, as it can affect your contents and the likelihood of water damage.

The property insurance policy defines water damage as “accidental discharge or leakage of water or steam as the direct result of the breaking or cracking of any part of a system or appliance containing water or steam.”

What could this mean for you? Assume for a minute that the gutters on your building are rusty and water is not being properly diverted off your roof. A rainstorm pushes water through the weakened area into your roof. Water leaks under the eaves, into your walls and starts to pool. And because it was over a weekend, your desk is now an island in a small lake. This damage is not covered by your insurance because it is due to improper maintenance, not a sudden and unforeseen event.

You should also know that flood, including the “accumulation of surface water, waves, tides, tidal waves, overflow of streams or any other bodies of water, or their spray, all whether driven by wind or not” are NOT covered under a property insurance policy. You must have a separate flood insurance policy in place to protect your business from these perils.

A general rule of thumb is water rising from the ground up is generally not covered by property insurance, unless you have your policy endorsed to include sewer or drain backup.

If in doubt about whether you’re covered or not for certain aspects of water damage, contact your agent or broker to discuss.

-JK