The homeowner’s insurance contract and interpretation control your insurance coverage. Some homeowner’s insurance policies cover only named perils and others cover everything not excluded. Three standard policies are HO-1, HO-2 and HO-3, with HO-3 providing the better coverage with provisions for coverage of items not excluded. Water is a common coverage issue, and you probably know that homeowner’s coverage does not include flood insurance. Water damage must be “sudden and accidental” for coverage under most policies.
Analyze Your Problem
You need to know where the water is coming from and how it is getting into the basement. You may have something as simple as overflowing gutters or downspouts too close to the house. Your homeowner’s insurance likely covers damage from a broken pipe but does not cover maintenance issues. If you have an irrigation system, you may be watering too often or the system may be too close to the foundation. Determine the cause of the basement leaks before you review the insurance policy.
Review Your Contract
Review your homeowner’s insurance policy for the kind of policy you have and for the coverage for water damage. You may see “covered perils” and a list of items that are covered. You may also see a list of items that the policy does not cover. The insurance policy with the list of items not covered usually indicates that it covers all other items. Review the covered perils and the perils not covered to see if your policy covers the basement water damage or if it specifically excludes your type of water damage.
Sudden and Accidental
If you have a frozen pipe that bursts and causes water damage in the basement, you may have insurance coverage for sudden and accidental water damage. If your basement has seepage caused from construction issues and the house is relatively new, you may have coverage under the homeowner’s warranty or the construction warranty, not your insurance policy. If you have seepage, this is not likely to be sudden and accidental. Most insurers consider seepage a maintenance problem, reports Insure website. Even the better HO-3 homeowner’s insurance policy does not cover seepage, according to Kyle Fitzsimmons at Insurance Agents.
If you can see that your insurance policy does not cover your basement damage, do not report the damage to your insurer. The report may appear as a damage claim and affect your ability to get insurance in the future. It may also increase your premiums. The Comprehensive Loss Underwriter’s Exchange (CLUE) is a database of insurance history used by insurers nationwide. Do not affect your CLUE report with a telephone call or report to the insurance company if you cannot make a claim.
- Insure.com: Water Damage -- Seven Home Insurance Scenarios
- Insurance Information Institute. "Homeowners Losses Ranked By Claims Severity (Average Claim), 2013-2017 (1)." Accessed Feb.28, 2020
- Insurance Services Office Inc. "Homeowners 3 - Special Form." Page 8-9. Accessed Feb. 28, 2020
- Insurance Information Institute. "Which disasters are covered by homeowners insurance?" Accessed Feb. 28, 2020
- Insurance Information Institute. "Insure Against the Risk of Sewer Backup." Accessed Feb. 29, 2020.
- Insurance Information Institute. "Protect Your House From Sewer Backups." Accessed Feb. 29, 2020.
- Insurance Information Institute. "Spotlight On: Flood Insurance." Accessed Feb. 28, 2020
- Insurance Information Institute. "Facts+Statistics: Flood Insurance." Accessed Feb. 29, 2020
Linda Richard has been a legal writer and antiques appraiser for more than 25 years, and has been writing online for more than 12 years. Richard holds a bachelor's degree in English and business administration. She has operated a small business for more than 20 years. She and her husband enjoy remodeling old houses and are currently working on a 1970s home.