The short answer is that homeowners insurance might cover some leaks and not others. The answer rests on the cause of the water leak. Homeowners policies are set up to protect you from water damage related to storms. Your policy should fully cover you should you suffer from wind or rain damage associated with a storm. Other kinds of water leaks may not be covered at all. Let’s take a closer look.
Suppose you have a leaky pipe hidden behind a wall or ceiling. It is quite possible you won't become aware of the problem for some time, especially if the leak is slow and in some out-of-the-way location in an unused basement. Your homeowners policy will not cover you for any damage caused by this kind of water leak. Insurers assume you will be responsible for leaky pipes, unless the leak is caused by some external event. You are also not covered for mold damage arising from leaky pipes.
It's a different story if a water leak or broken pipe occurs due to an external event. For instance, suppose a city sewer is overwhelmed by a rainstorm and causes a pressure surge in your pipe system that results in a busted pipe. Your policy should cover this kind of event, as well as frozen pipes. However, many policies do not cover damage (including water leaks) caused by earthquakes, so if you live in a quake-prone area, seek out additional coverage.
A storm can wreak havoc on a roof and windows. High winds can blow shingles away, exposing your top floor to rain damage. A wind-driven tree limb can shatter a window, allowing rain to enter. A homeowners policy will protect you against the costs to fix the roof and windows, and also reimburse you for associated damages to your belongings. If a storm is a hurricane, you might be subject to higher out-of-pocket deductibles -- check with your agent for details.
You can think of a flood as one gargantuan water leak, but unless you have flood insurance, you are not covered by your standard homeowners policy. If you live in a flood plain, you should not hesitate – tell your insurer you want flood insurance. The insurer will make arrangements with the National Flood Insurance Program to add coverage to your policy, typically for a few hundred dollars per year. Do not rely on government disaster relief for floods, because these are loan programs and you must pay back any money you borrow.
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- Homeowners Coverage Guide, 4th Edition; Diane Richardson
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