Basement floods can get messy and expensive, and standard homeowners insurance only covers them under certain circumstances.
Since most basements are susceptible to flooding from one cause or another, it’s important to know your insurance options. Here’s a look at when homeowners insurance covers basement floods, and additional insurance choices to consider for more protection.
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When does homeowners insurance cover basement flooding?
Standard homeowners insurance generally does pay to repair or replace property damaged by a basement flood when the flood is caused by a peril normally covered by your policy.
Unless you have a very basic policy, home insurance usually covers a sudden and accidental release of water from a household appliance or system, including one that causes a basement flood.
Most policies also cover basement floods resulting from a failure of your water heater and your home’s heating, air conditioning and fire protective sprinkler systems.
A basement flood does not qualify for coverage if a water discharge or system failure in your home is the result of neglect.
Insurance companies expect you to take reasonable steps to maintain your home’s systems and appliances in good working order.
When the source of your basement flooding is not excluded by your policy, your dwelling coverage applies to structural damage, and your personal property coverage applies to damaged belongings. The insurance company subtracts your deductible from the payments you receive.
If you’re shopping for home insurance, ask the companies you contact for quotes about any additional exclusions or limits they may apply to potential flooding in your basement.
Ruptured water heater or boiler
A ruptured water heater or boiler is among the causes of basement flooding that most home insurance policies do cover, provided the rupture is not the result of neglect.
Although homeowners insurance covers damage to your basement and belongings, the cost of replacing the water heater or boiler comes out of your pocket.
Burst pipes are another source of basement floods that home insurance typically covers.
Deep winter freezes are a common cause of pipe bursts. Water expands when it freezes. Inside a pipe, frozen water can create cracks. Once temperatures return to normal, the damaged pipes can no longer contain the water inside them.
If frozen pipes lead to a flood in your basement, your insurance company covers the damage as long as you had kept the temperature in your home to at least 55 degrees and shut off your water intake as soon as possible.
You can reduce the risk of your pipes freezing by insulating them and/or leaving a faucet running during a freeze.
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When does homeowners insurance not cover basement flooding?
Water backups, slow leaks and actual floods are among the most common sources of basement flooding that homeowners insurance does not cover. However, additional insurance is available to guard against each of these risks.
Insurance protection for water backups
Standard home insurance normally excludes water backups such as sump-pump failures, drainage backups and reverse flows in your sewer line. All three can lead to messy basement floods.
However, most companies offer a water-backup endorsement that provides limited coverage for these types of mishaps as an optional add-on to your policy.
Although prices and coverage terms vary by company, these endorsements typically add $5 to $10 a month to your insurance bill. They usually cover the cost of cleaning up after a water backup and repairing or replacing damaged property, including your belongings, up to a specified limit.
The coverage is usually capped in amounts ranging from $10,000 to $25,000, depending on the insurance company. Higher limits may be available. Consider a higher limit if you have a finished basement with expensive flooring materials and furniture.
Insurance coverage for basement floods caused by seepage
Standard home insurance generally doesn’t cover basement floods caused by slow, hidden leaks from your home’s appliances or major systems.
However, some companies offer a water-leak endorsement that may cover a basement flood caused by water seeping out of an appliance or system.
Unfortunately, a basement flood caused by water seeping through your foundation’s walls is also typically not covered by homeowners insurance or any of the other common endorsements available as add-ons. Foundation leaks are generally considered to be maintenance issues rather than insurance perils.
What is an actual flood?
Although most people use the term flood generically to describe any large, abnormal accumulation of water, insurance companies have a more specific definition.
From an insurance company’s perspective, a “flood” is an accumulation of water from rainfall, a storm surge or another specified cause that covers at least two acres of normally dry land or two adjacent properties.
Homeowners insurance does not cover basement floods resulting from an event that meets the technical definition of a flood, but flood insurance does.
How does flood insurance cover basement floods?
Most flood insurance is purchased through the government-backed National Flood Insurance Program (NFIP), but a few private companies also offer it.
Although flood insurance and home insurance are separate products, many home insurance companies are authorized to sell flood insurance.
The building coverage in NFIP flood insurance extends to your basement’s structural elements as well as furnaces, water heaters and well water tanks.
The contents coverage in NFIP flood insurance is more limited for items in your basement than it is for items elsewhere in your home. In a basement, it only covers:
- Clothes washers and dryers
- Air-conditioning units
- Food freezers and the food inside
NFIP flood insurance does not cover basement improvements, such as floor and wall coverings and personal items kept in your basement, including furniture and clothing.
However, NFIP policies cover a wider range of personal items when they are in above-ground areas in your home.
The average cost of NFIP flood insurance is $874 a year, or $73 a month.
Does home insurance cover basement floods caused by rain?
Although standard homeowners insurance excludes actual floods caused by rain, some policies cover basement flooding that occurs after a covered peril allows rainwater into your home.
For example, if a fallen tree or severe winds create an opening in your home that allows rainwater to flood your basement, your homeowners insurance may cover the damage.
The specific coverage terms for incidents such as these vary by insurance company.
How to file an insurance claim for a basement flood
Regardless of the cause of your basement flood, your first step in preparing to file an insurance claim is to protect your home and belongings from further damage, as soon as it is safe to do so.
Remember to photograph all damage before you move any items. Jot down the date, time and other relevant details about your basement flood, too.
Your next step depends largely on the cause of the flood and the amount of damage it has caused.
If a burst pipe, ruptured appliance or other covered peril causes major damage to your basement, it’s usually best to open a claim with your insurance company right away.
On the other hand, if the damage is minor or you’re not sure if it’s covered by homeowners insurance, it may be better to initially just “inquire” about a claim.
You have to let the insurance company know you are only inquiring to keep them from reporting your incident in the Comprehensive Loss Underwriting Exchange (CLUE). Once an incident shows up in your CLUE report, it remains on your insurance record for up to seven years, even if you never seek or receive an insurance payment.
When you speak to your home insurer’s representative, make sure to use the term “water damage” rather than “flood damage” to avoid confusion over the type of claim you are inquiring about.
The insurance company’s claims representative should let you know if your policy is likely to cover the damage or not. However, you won’t know for sure until an adjuster inspects the damage, which typically only occurs if you formally open a claim.
You never want to skimp on cleanup for a basement flood. Failing to properly sanitize and/or replace materials exposed to water can lead to lingering mold problems.
However, if you can afford to cover the cleanup and repair costs out of your own pocket, you can avoid a potential increase in your future homeowners insurance rates by paying for repairs yourself and avoiding an insurance claim.
How to negotiate a basement flood claim with your home insurer
If you do file a claim, make sure to review the insurance company’s settlement offer carefully. Make sure its descriptions of your damage are consistent with your photos, notes and recollection.
You don’t have to accept the insurance company’s first offer, and you can use your photos and notes as the basis for negotiating a larger payout with the company’s claims department. Consider hiring a public adjuster or attorney if you need assistance.
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