Water damage is one of the leading claims filed by homeowners and accounts for billions of dollars in losses annually in the U.S. Yet many homeowners are unaware of what types of water perils are—and are not—covered by their home insurance policy. Unfortunately, this can put homeowners in a slippery and stressful situation. Imagine having to file a water-related claim, and then discovering the damage is only partially covered—or worse, not covered at all by your home insurance policy. Does your homeowners insurance cover water damage and common water perils? Let’s find out…

Does Home Insurance Cover Broken or Burst Pipes?

Whether caused by clogs, water pressure spikes, or even frozen water, burst pipes are one of the top causes of water damage in homes. Excessive water force may cause pipes to swell and eventually break, spouting water everywhere and damaging floors, carpeting, drywall, and insulation.

Facts about Leaky and Burst Pipes

The average home loses 14 percent of its water to leaks.

• Water-damage claims, mostly from leaky or burst pipes, are the leading cause of increased home insurance rates.
• Water damage caused by plumbing failures and frozen pipes is the second leading cause of property loss.

What Type of Insurance Do I Need?

Water damage from a burst pipe is typically covered under a standard HO3 homeowner’s insurance policy. However, damage caused by sewer and drain backups is not usually covered. For complete protection in case of a backup-related incident, you can add sewer backup coverage to your policy.

What’s Covered?

Most HO3 homeowners policies cover water damage caused by a burst pipe as long as the incident is sudden and accidental. If water damage occurs outside of your home, you’ll need to be able to demonstrate that a burst pipe was the culprit. Keep in mind that water damage resulting from unresolved maintenance issues, such as ongoing leaking near a sink faucet or washing machine, will probably not be covered, and your claim may be denied.

Does Home Insurance Cover Floods?

A flood is any overflow of water caused by storm surge or rising water from heavy rain—something you see a lot of in Florida. Remember, you don’t need to live near a lake, river or the coast to experience a flood.

Facts about Floods:

• Floods are the leading natural disaster in the U.S.
• 25 percent of flood losses come from low- to moderate-risk areas in Florida.
• On average, as little as two inches of water in your home can cause $7,800 or more in damage.

What Type of Insurance Do I Need?

Losses due to flooding are not typically covered under your home insurance policy, so we recommend purchasing a supplementary Florida Flood Insurance policy for complete protection. Flood insurance policies are issued by First Community Insurance Company, which is authorized by the Federal Emergency Management Agency (FEMA) to sell flood insurance. In some flood zones, you can purchase flood insurance for about $1.40 per day, and it’s 100 percent guaranteed by the U.S. government. Remember, flood insurance requires a 30-day waiting period before it’s activated, so don’t delay.

What’s Covered?

Flood insurance covers damage caused by overflow of inland or tidal waters that have inundated two or more properties, at least one of which is yours. Keep in mind that flood damage from wind-driven rain is not covered under flood insurance. When rain enters your home through a wind-damaged window, door, wall, or roof, the National Flood Insurance Program considers the resulting damage to be windstorm-related, not flood-related.

Does Home Insurance Cover Wind-Driven Rain?

Windstorms are weather events that produce winds and violent gusts strong enough to cause significant property damage, such as hurricanes and tornadoes.

Facts about Windstorms:

• Windstorms can have wind speeds exceeding 200 miles per hour.
• Heavy winds cause about $1 billion in damages in the U.S. every year.
• Approximately 85 percent of all windstorm-related insurance claims result from roof damage.

What Type of Insurance Do I Need?

Windstorm insurance covers damages caused by hurricane-force winds, tornados, hail, and other weather events with wind gusts exceeding 35 miles per hour. In hurricane-prone states like Florida, you may be required to purchase a separate windstorm policy to provide complete protection of your home.

What’s Covered?

Windstorm insurance typically covers damages to the structure of your home and the personal belongings inside of it. Most policies also include coverage for detached structures such as garages, sheds, and swimming pools. Windstorm events like hurricanes are often followed by storm surge and flooding, which are not covered. A flood insurance policy must be purchased separately to cover any damages related to flooding, even if the flooding was caused by a windstorm.

Does Home Insurance Cover Mold?

One common and gross side effect of water damage is mold. In addition to being hazardous to your health, mold can depreciate the value of your home by discoloring walls and ceilings, rotting wooden floorboards and siding, destroying insulation, or emitting a musty odor.

Facts about Mold:

• The most common indoor molds are Cladosporium, Penicillium, Alternaria, and Aspergillus.
• Mold can cause nose stuffiness, coughing or wheezing, and irritation of the throat, eyes and skin.

What Type of Insurance Do I Need?

Most home insurance companies cover mold growth resulting from a covered water peril. While some companies have begun taking steps to avoid or limit their exposure to mold claims , People’s Trust understands that mold must be promptly remediated in order to prevent further damage.

What’s Covered?

Your standard HO3 homeowner’s insurance policy will most likely cover the costs of eliminating mold caused by a burst pipe or other covered water peril. However, your policy will not cover the cost to remove mold caused by neglected maintenance issues, such as ongoing water leaks, humidity problems, or landscaping and drainage issues. Additionally, mold that develops from flooding will not be covered under your standard homeowner’s policy.

Does Home Insurance Cover Roof Leaks?

There’s nothing more comforting than knowing you have a safe roof over your head. Your home’s roof is the first line of defense in protecting you and your belongings from earth, wind, and fire (and more)! But even roofs have their weaknesses…

Facts about Roof Leaks:

• Roofs, on average, last only half of their designed lifetime.
• Moisture from leaking roofs causes more damage to homes than termites, fires, and storms combined.
• 40 percent of all building-related problems are caused by water entering through the roof.

What Type of Insurance Do I Need?

A standard HO3 homeowner’s insurance policy typically covers water damage caused by a roof leak. Whether or not it’s covered depends on the cause of the leak.

What’s Covered?

If the roof leak was caused by Mother Nature (e.g. rain, hurricanes or tornadoes) or other sudden, uncontrollable events, your home insurance policy will likely cover the cost of the associated water damage. On the other hand, roof leaks resulting from failure to maintain your roof as it ages will not be covered. That’s why it’s so important to have your roof inspected and repair or replace it as needed. Because carrier rules and regulations differ among home insurance companies, it’s important to review your policy to make sure you have the insurance you need so you can enjoy peace of mind knowing your home is covered in the event of a water loss.

By Guylaine Cadorette | Mar 09, 2021

Shopping for a new home is an exciting time for many Floridians, but few know that the home they choose could make or break their home insurance rates.

Whether you’re searching for an already built home or planning to construct one from the ground up, there are some important factors to consider before you purchase your dream home.

Is Hazard Insurance the Same as Homeowners Insurance?

If you are applying for a mortgage or shopping around for homeowners insurance, you may encounter a variety of terms defining the types of insurance you can purchase and what is included in your policy. Hazard insurance is not a separate policy from homeowners insurance. Instead, it is a specific coverage included in most homeowner’s insurance policies.

Hazard insurance provides specific coverage related to the structure of the dwelling. Besides covering hazard insurance, most home insurance policies will provide additional coverage for other types of damages, such as casualty insurance and liability coverage if someone sustains an injury on the property. Typically, homeowners insurance will contain the following coverages:

• Hazard coverage
• Dwelling coverage
• Additional structure coverage
• Personal property coverage
• Loss of use coverage
• Personal liability coverage
• Medical payments coverage

What Is Hazard Insurance?

Hazard insurance provides coverage specific to the structure of your home. When asking about the types of insurance you need, lenders will often specifically ask for a hazard insurance policy to ensure that if they issue you a loan at minimum, the structure on the property is covered. Because lenders often ask for hazard insurance specifically, the term’s everyday use has become ambiguous with its true definition.

What Does Hazard Insurance Cover?

Hazard Insurance typically provides coverage in two distinct types; named perils and open perils. Named perils will be specific to your policy and ensure coverage. In contrast, open perils are perils covered that are not explicitly named in your policy. Named perils may include:

• Home fires and fires caused by natural disasters
• Smoke damage
• Theft
• Vandalism
• Explosions
• Wind and damage caused by wind storms, such as falling trees
• Hail
• Lightning and burn damage caused by lightning
• Damage from vehicles
• Damage from aircraft
• Damage from riots or civil commotions
• Damage from volcanic eruptions
• Falling objects
• Damage from freezing pipes or AC
• Accidental damage from electrical currents
• Damage from the weight of snow, ice, or sleet

Open perils typically cover everything except the following:

• Earth movements, such as damage from earthquakes
• Ordinance of law and government action
• Some types of water damage
• Damages from power failures
• Damages from neglect of the property
• War
• Theft during active construction
• Intentional loss
• Mold, fungus, or wet rot
• Smog, rust, and corrosion
• Discharge and seepage of pollutants
• Birds, vermin, rodents, and insects
• Damage to the property from animals that you own
• Normal wear and tear of the dwelling

It is vital to review your insurance policies to understand what your personal policy lists and provides coverage for. Every policy may be unique and may not cover the same types of damage as previous policies you may have had.

Hazard Insurance Claim Reimbursement

If damage occurs to the dwelling covered by hazard insurance, you will be required to first pay the amount defined by your deductible, and the insurer will cover the remaining amount. Your reimbursement will depend on the reimbursement provisions in your policy, typically boiling down to one of the two following:

• Actual cash value. Actual cash value is typically the least expensive policy to purchase and often offers the smallest amount of reimbursement for damages. Actual cash value provides reimbursement for what your property was worth—including any wear or tear and depreciation at the time it was damaged or destroyed.
• Replacement cost value. Replacement cost value typically comes at a higher expense but provides reimbursement for the property—regardless of depreciated value. This means that your coverage replaces the damaged or stolen property at its full cost for a brand new item—regardless of wear, tear, and depreciation.

Is Hazard Insurance Required?

Homeowners’ policies and those that include hazard insurance are generally not a legal requirement. However, if you are applying for a mortgage or purchasing your home through a loan, your lender may require you to have a homeowners insurance policy that includes hazard insurance. This lender requirement ensures the lender that if something happens to the dwelling on the property, the asset is covered and financially protected. Some lenders may require you to pay a year’s worth of premiums on the insurance policy in advance of signing a home loan.

While obtaining homeowners insurance and subsequently hazard insurance may not be a legal requirement, it is best to get as much coverage as you can to ensure that your property and valuables are protected in the event of theft, vandalism, accidental damage, or damage caused by unforeseen events such as the weather.

If you own a property that you wish to use as a second home, you may need to consider homeowners insurance for second homes and vacation properties that include hazard insurance or a landlord insurance policy. Choosing between these types of policies will depend on your personal situation and individual needs.

How Much Is Hazard Insurance?

The cost of a homeowners insurance policy that includes hazard insurance will depend upon a few factors that include:

• The value of the property and dwelling
• What is included in the policy
• The policy limit
• The deductible amount
• If you choose reimbursement as actual cash value or replacement cost value

Considerations for selecting your insurance will depend on your personal budget and how much you can afford, as well as the type of coverage you decide is necessary to keep your property, dwelling, and personal belongings covered for reimbursement.

For example, you may choose to pay a smaller premium for an insurance policy that does not provide extensive coverage and only offers actual cash value. In the event of damage, your property may not be covered, or you may end up paying more to replace your damaged items.

If you choose a policy with more extensive coverage that includes replacement costs, you may rest assured knowing that your assets are protected; and that you will receive full reimbursement to replace your damaged items or property