A flooded basement is one of the most ambiguous insurance situations a homeowner can find themselves in. Some situations are covered by home insurance, while others require a special type of coverage like flood insurance or an endorsement. Below we discuss the most common ways your basement can flood, which type of insurance you would need in each case, and whether you are covered.
When Doesn’t Homeowners Insurance Cover a Flooded Basement
Unfortunately, there are many common situations where basement flooding wouldn’t be covered by a standard homeowners insurance policy.
The following situations are not covered by a standard home insurance policy:
Rising Water from a Storm, Surge or Heavy Rains
With very rare exceptions, any flooding caused by nature will not be covered under your home insurance policy. For all rising water situations only flood insurance can save your basement–and even then coverage is limited. Flood insurance covers certain objects in your basement like most personal belongings and appliances, but typically won’t include the structure (any finished ceilings or floors). When you purchase a flood policy, it’s important to purchase both dwelling and contents coverage to get the maximum coverage for your basement. We recommend a policy that provides replacement cost value for your personal items when possible.
The best defense against a flooded basement is to have a functioning sump pump that pushes water out as it fills up in your sump tank in the basement. Preventing a flood in the first place will likely always be the cheapest and most convenient option–especially if you have a finished basement. Should your sump pump fails as well, there is additional sump pump coverage you can add to your home insurance policy that covers your basement up to $25,000 if it fails. Of course, the failure will have to be a malfunction and not a result of poor upkeep of the system.
Make sure you have a good agent that understands this and is able to offer carriers that provide such an endorsement if you live in a wet/rainy climate. Not all insurance carriers have this coverage as an endorsement to their standard homeowners policy.
If an external sewer system backs up into your home and basement, your insurance will not cover the resulting damage without a separate endorsement added to the policy. Sewage backup can be one of the most expensive disasters than can befall a home, and there are few ways for homeowners to recoup their losses should it happen. Most home insurance companies do offer an endorsement for sewage backup, and it is relatively inexpensive. Always make sure your agent provides a MINIMUM of $10,000 coverage in this case. Depending on the carrier, you can get more or less than that amount. Sewage backup can easily cost thousands of dollars to repair.
Water Seeping from Underground
This is a tough case for a homeowner to be in, because this is generally not covered. After a period of heavy rain, the ground can become saturated with water, and that water can seep through the ground into your basement. Homeowners insurance companies do not consider this a cover-able calamity. Flood insurance also won’t cover it unless the seepage is directly related to a flood in the area. The best defense against this disaster is to make sure the foundation of your home is solid and up to date on all inspections. Another way to prevent this is to have the walls of the basement sealed if they have not been in many years. This is a relatively inexpensive option for most homeowners with older basements.
When Does Homeowners Insurance Cover a Flooded Basement?
There are many reasons your basement can flood. If any of the following happened in your basement, so long as you have a standard home insurance policy, you should be covered.
Flood Caused by Broken Appliance
If the washing machine, AC unit or refrigerator you keep in your basement malfunctions and floods the entire room, the water damage is typically covered under a standard homeowners insurance policy. You will need to be on guard however to show your insurer that the cause of the damage was not caused by a lack of maintenance. If they can prove the appliance broke because you hadn’t taken care of it for a while, they can deny your claim. A truly faulty appliance malfunction will always be covered. Another thing to note is that the cost of replacing the appliance itself isn’t always insured under the claim…ask your agent if your carrier offers this. Not all carriers will cover the appliance itself. So to be clear: the flooding it causes is covered, but you have to buy the new equipment out of pocket in many cases.
Flood by Leaking Water Heater
Damage from a leaking water heater is covered under the same provision as your leaking appliances. Again however, you must be sure that the water heater is not leaking as a result of neglect or malfunction. If your insurer finds any proof the cause of the leak was poor upkeep on your part, your claim will be denied.
Freezing Pipes Burst
If one winter night the temperature becomes extremely cold and your pipes burst from the freezing water, your home insurance policy would cover the damage of that flood as well. Burst pipes from an AC unit, sprinklers and appliance are also covered if they freeze. The main condition is that you have to be living in the home while it was flooded. The only exception is if it can be proved you were still maintaining the home with heat, and/or turned off all water system – common when homeowners go away for a winter vacation. This is something you should consider if you have a secondary home in a cold climate.
Flood Caused by Overflowing Rub, Pool, Sink, Etc.
You may be surprised to find out that if your basement is flooded as a result of an overflowing tub, pool, sink or any other container for water, you would be covered by your home insurance policy. This calamity is considered “sudden and accidental” so your insurer will foot the cost for replacing what was destroyed. So if your child decides to fill the toilet in the basement with all the toilet paper in the house and proceeds to flush a bunch of times, home insurance will cover any of the resulting flood damage.
I hope this helps answer any questions about water damage in your home. Should you need any further information, or have any individual circumstances, feel free to give us a call any time for advice.