What Is a Water Exclusion Clause? 🚿
A water exclusion clause is a restriction in homeowners and rental insurance policies that denies coverage for some water-related claims. Events likely to fall under a water exclusion clause include damage caused by floods, tsunamis, standing water, groundwater, and drain or sewage backups.
Homeowners and renters may be able to add types of water damage coverage excluded in the standard policy by purchasing a rider or separate, specialized insurance.
Key Points ✨
- A water exclusion clause is a standard feature of property insurance contracts, denying coverage for various categories of loss associated with aquatic events.
- Typical water exclusion clauses include floods due to external causes, sewage or water main failures/backups, tsunamis, standing or groundwater.
- Homeowners policies generally cover sudden water damage inside the home, like a burst pipe or overflowing toilet.
- Separate flood insurance can provide coverage against flooding.
Understanding a Water Exclusion Clause 💧
A water exclusion clause is common in most property insurance policies. The reasoning is that only specific areas are prone to water-related natural disasters, such as floods, tidal waves, or tsunamis. Water exclusion is one of several types of exclusion clauses found in homeowners and renter insurance contracts. Common exclusions include movements of the earth like earthquakes and landslides, wars, and nuclear hazards.
However, water-related perils aren’t totally excluded by homeowners insurance. Most policies routinely cover water damage caused by sudden or accidental events within the structure, such as a burst pipe or malfunctioning dishwasher. Gradual damage or wear and tear over time is usually not covered.
Destruction from certain weather events is generally covered. For example, water damage from a tree crashing through a wall due to a thunderstorm or snow collapsing a roof is typically included. Hurricane-related damage might also be covered, although in certain areas, policyholders may have to pay an additional hurricane deductible before coverage kicks in.
Special Considerations: Floods and Water Exclusion Clauses 🌊
Unless due to internal causes like a malfunctioning appliance or overflowing toilet, floods are typically part of a water exclusion clause. Controversy and legal debates may ensue over whether floods from man-made causes (e.g., a burst dam) or floods on man-made surfaces are covered.
Ultimately, floods from external sources that seep into a home are usually not covered under standard homeowners policies. Due to the high cost and prevalence of water damage, finding alternative coverage options is crucial.
Average Losses Due to Water Damage and Freezing in 2018: $10,849
Usually, this means purchasing separate flood insurance, especially in high-risk areas where it might be required by lenders. Flood insurance requires separate policies for the property and its contents. Homes financed by federally backed lenders need flood insurance if they’re in designated flood hazard zones.
Flood insurance policies are available for both residential and commercial properties. Renters can get flood insurance policies that cover personal property.
While many insurance companies offer flood insurance, rates are regulated by the National Flood Insurance Program (NFIP), so the cost stays consistent regardless of the provider.
Related Terms: Homeowners Insurance, Renter’s Insurance, Water Damage Coverage, Flood Insurance, Hazard Insurance, Hurricane Deductible.
References
- Insurance Information Institute. “Background on: Hurricane and windstorm deductibles”.
- Insurance Information Institute. “Facts + Statistics: Homeowners and renters insurance”.
- Federal Emergency Management Agency. “Buying flood insurance”.
- Federal Emergency Management Agency. “Types of flood insurance”.
- Federal Emergency Management Agency. “Flood Insurance Rules and Legislation”.
