Does Homeowners Insurance Cover Water Damage?

 

Thoroughly reading through your Greensboro homeowners insurance policy is the best way to learn just what is and what isn't covered in your contract.  It's especially important to understand how water damage is handled, since claims for water damage can often be denied by an insurer due to confusion of what qualifies under a standard policy.

Water Damage Coverage on Your Greensboro Homeowners Insurance Policy

A standard home insurance policy requires that for a claim to qualify for payment, it be a sudden and unexpected loss.  There are additional requirements for a qualified water damage claim.

The source of water damage may be varied.  As a rule, in order to qualify for a claim the water that damages your home must be the result of one of the perils covered by your homeowners policy.  This may include:

• Rain or snowstorm damage
• Plumbing accidents such as burst pipes, accidental overflow of a bathtub, toilet or sink, faulty water-using appliances such as hot water heaters, washing machines or air conditioners
• Frozen plumbing inside the house
• Water damage from fire extinguishment
• Vandalism

From the Top Down, Not the Bottom Up

One way to think about water damage that qualifies for a loss claim is to remember that the damaging water must have never touched the outside ground.  Another way to look at it is that the damaging water must be internal or come from above, never from below.  This qualifies:

• Ground water seepage
• Sewer pipe or water backups
• Flooding

You'll also find that water damage caused by lack of maintenance or neglect will not be covered by your Greensboro homeowners insurance policy.  This means if the pipes in your home freeze and then burst while the home if left unoccupied and the heat was turned off, you won't likely be covered for the loss.

Mold

Mold is insidious and dangerous to your health and often accompanies water damage.  Whether on not your home insurance will cover you for mold removal/remediation costs will be determined by the cause of the water damage preceding the mold development.  If the water damage is covered, the mold removal will likely also be covered.

Flooding

Flood damage can be covered by getting a special flood policy.  Available through your trusted agent or broker, these policies come from a government program called the National Flood Insurance Program (NFIP), which comes under direction of FEMA, the Federal Emergency Management Agency.

Homeowner's Insurance Costs: Newer Versus Older Homes

Buying an older home can bring with it some up-front costs you might not experience when buying a newer home, depending on how much damage or deterioration the older home has seen in its life. As a general rule, older homes also present a higher risk factor to insurance companies, so another up-front cost you likely will have to deal with is a higher premium rate on your homeowner's insurance coverage.

Though this higher premium rate for your particular older home may not necessarily be the case, since all homes and homeowner's insurance policies are different, it's true more often than not. Here's why:

-  Certain systems within an older home may be outdated and require replacement in order to bring it up to codes and current safety standards. This may include the plumbing and electrical systems, which would both be expensive to update to today's standards.

-  Older homes may have certain physical hazards due to their old age such as foundation problems or the need for roof replacement. They may also be plagued with health hazards such as lead paint, asbestos and mold.

-  Certain older features like hardwood floors and plaster walls may be difficult and expensive to replace. If your older home is included within the National Historic Register, this will almost certainly increase the cost of your homeowner's insurance.

Two Important Tips for Buying Homeowner's Insurance

The number one rule for those shopping for insurance, any kind of insurance, is to get multiple quotes that will allow you to comparison shop. Using an independent broker with access to numerous insurance providers is an easy way to do this, allowing the broker to do the groundwork and present you with multiple options from which to choose.

Always look for discounts. Sometimes, you'll have to ask about available discounts to find out about them. Often, insurers have lots of discounts they can provide to qualified prospective customers.

Special Tips When Insuring an Older Home

Some things that may be standard in most modern homes could be missing in older homes and should be considered in order to upgrade the home and lower your home insurance rates. Consider the following:

Installing smoke alarms and carbon monoxide detectors can sometimes lower insurance costs by as much as 10%.

Dead-bolt locks, sprinkler systems and monitored burglar alarms may all help lower insurance rates on older homes.

Bundling Renters and Auto Insurance: 4 Things to Know

If your insurance company offers this particular discount, bundling renters and auto insurance together is a way to potentially save some money as opposed to buying these two coverages separately. This bundling option is offered by most insurers that sell both auto and renters insurance because it increases their business.

It not only saves you some premium dollars but also helps make your insurance portfolio easier to deal with since you can transact business with a single agent and have contact with your insurer through one single contact point when you need to make a claim. Multiple policies carried with one provider also simplifies paperwork/billing, saving time and money for you and your insurer.

You may save additional funds by adding more policies to your bundling renters and auto insurance strategy. Motorcycle insurance, boat insurance and even life insurance can be added to the discount scenario to bring you even more savings.

Bundling Usually Saves Money

Insurers that offer a discount for bundling multiple policies typically give from 5%-25%, with the highest discount commonly for a homeowners insurance policy since, your home represents such a large investment. Renters insurance won't provide as large a discount, but every little bit helps. If your insurance company can get you to add multiple policies to your coverage that's one less client they need to bring in to make their customer quotas.

One caution about bundling policies, however, is to make sure you don't become complacent about your coverages and adopt a “set it and forget it” mentality. You should continue to compare rates with competitor insurers to make sure you're still getting acceptable rates. Just because you have a multiple policy discount from one insurer doesn't mean you shouldn't consider switching companies if you can get a better deal elsewhere.

A Word About Renters Insurance

The number of renters is on the rise, with renters now outnumbering homeowners in a number of American cities. While it's estimated that approximately 91% of American homeowners carry homeowners insurance, only about 46% of renters carry renters insurance. This is according to the 2018 Pulse Survey conducted by the Insurance Information Institute.

Like homeowners coverage, renters insurance provides protection against loss, damage or destruction of the the personal property you have in your residence. It also gives you liability protection and provides living expenses should you be required to temporarily vacate your dwelling following an insured disaster. Yet, renters insurance is relatively inexpensive, costing an average of less than $200 per year.

What Can I Do to Lower My Homeowners Insurance Premiums?

If you're like most homeowners, your home and personal possessions represent your largest investment. You need to protect that investment, which is why you're willing to pay homeowners insurance premiums to an insurance company who will extend that financial protection to you for a price.

If you have a mortgage on your property, the mortgage company requires that you take out insurance coverage to protect their financial investment in your home. If your home is destroyed, they want to know they'll be paid back for the amount outstanding on your mortgage loan.

A Major Problem 

According to a recent survey by research firm Marshall & Swift, fewer than half the homes in the U.S. are covered by enough insurance to rebuild them after a major disaster occurs. They go on to say that approximately 60% of American homes are worth more than their insurance reflects (by 17%). This is an improvement, however, from 30 years ago when, according to the Insurance Information Institute, 73% of homes were underinsured by an average of 35%.

There's no doubt that a certain number of these homes are being underinsured for the purpose of lowering the homeowners insurance premiums. Another explanation is that many homeowners only carry as much homeowners insurance as is required by their mortgage lender, equal or greater than the current amount owing on their mortgage loans.

If you fall into this category, there's a good chance that your home is underinsured. The cost difference between the amount owed on your loan and the amount that would be required to rebuild your home, including construction materials and labor, is likely significant.

Saving on Premiums

Underinsuring your home in order to save on premium dollars is only smart if you know for a fact that you'll never need to make a major claim on your policy. And, of course, you couldn't know this absolutely. As the old saying goes regarding insurance: “It's better to have it and not need it than to need it and not have it!”

There are, however, other ways to lower your homeowners insurance premiums that are safe and make good sense. Consider these:

• Shop around for the best deal. Use a broker with multiple companies from which to choose
• Bundle your home, life and auto policies with the same company
• Explore every discount available
• Choose a higher deductible
• Improve your home's disaster resistance
• Add home security features