When you’re faced with water damage, it can feel like everything is working against you. After faithfully paying your insurance premiums for years, you expect that your provider to help pay for repairs. Unfortunately, some accidents may not be covered by your policy, leaving you to wonder why your insurance company won’t pay for your water damage.
At Avner Gat Inc., we’ve worked on hundreds of homeowners insurance claims. In our experience, families find it difficult to understand how the insurance company makes coverage determinations, particularly in regards to water damage. We sat down with our founder, Avner Gat, to answer some common questions about the topic:
Why do insurance companies deny water damage claims?
Every case is a bit different, but oftentimes, I see insurance companies denying claims based on a provision in the homeowner’s insurance policy that specifically excludes damage caused by repeated seepage and leakage. Essentially, what that means is that if the accident that led to the water damage is not ‘sudden and accidental’ like a burst from pressurized fresh water pipes, then it can’t be considered a covered loss.
Could leaks and seepage ever be considered ‘sudden and unforeseeable’?
Typically, leaks happen gradually. The damage accumulates over time. Your insurance company feels that it is the homeowners duty to be on top of maintenance and plumbing issues in your home. That means that they expect you to identify the problem and take action, sooner rather than later.
What happens if I didn’t find the leak right away?
Not all leaks will be obvious and noticeable. In fact, I’ve spoken with many homeowners who didn’t uncover the leakage until the damage was done. When that happens, these homeowners call me and say the insurance company denied the claim because of a slow leak inside the wall or under the flooring.
These families are in a very difficult situation. They explain that they didn’t see the leak and ignore it, they just didn’t know what was happening inside the walls. When the effects of the leak aren’t visible right away, families struggle to understand why their insurance provider won’t pay for water damage repairs.
Of course, these homeowners have a good point! They weren’t being negligent and avoiding routine maintenance. From their perspective, the damage did appear quite suddenly. However, the insurance companies see the situation differently, which is why they avoid offering coverage for leakage and seepage.
Why do insurance policies exclude leakage and seepage?
When I talk to homeowners about these exclusions, I find that it’s helpful to explain using health insurance as an example. Your health insurance policy may look quite different from other policies. For example, if you’re an elite athlete, you might take out a specific policy on your arms and legs. On the other hand, if you work as a model, you may need insurance for specific facial features.
Before issuing a quote for coverage, insurance companies take your unique risks and needs into consideration. They know that no one wants to go to the doctor, but they may also look at the specific riders and coverages you’ve requested and conclude that you’re very invested in maintaining your health. This could ultimately lower your premium.
In the same way, when a homeowner’s insurance company issues a policy, they must first calculate their risk. Insurance providers want to offer coverage for events where they know they’re working with the homeowner, and both parties are equally invested in preventing the damage.
From the insurance companies’ perspective, they cannot insure accidents like leakage and seepage, because the company wouldn’t know about hidden leaks either. They don’t want to assume responsibility because they cannot calculate their risk. Insurance providers only want to cover events where they know that homeowners will act immediately. In fact, some companies may even limit the time you have to respond to damage – counting down from the moment the accident happens until you take action.
What kind of immediate action do I need to take for the insurance company to pay for repairs?
Taking action doesn’t have to mean filing a claim! If you notice a small leak in the kitchen sink, it would be reasonable to call a plumber yourself, rather than file a claim and pay a steep deductible. In those situations, you need to keep receipts and records so that you can prove you actually did something. Whether you contact a professional or do the work yourself, save the receipts so you can show your insurance company you’ve been proactive.
In some cases, it may be tempting for homeowners to misrepresent when the damage occurred if it looks like their claim will be denied. Please note that insurance companies have ways to find out how long its been since a water damage event took place. For example, they may look for abnormalities with the water bill or gas bill. If they can prove the damage was ongoing and left unattended, they won’t cover it. More importantly, they may take further action against you if they believe the deception qualifies as fraud.