Say What? A Policy That Does Not Cover Any Water Damage

I look at insurance policies day in and day out—it’s just a part of my job. Every now and then, I come across something that makes my head spin or causes me to do a double take.

Readers of this blog have seen some of my posts where I implore homeowners to read their homeowner insurance policies and ask questions if there are terms or provisions they don't understand. Well, most homeowners purchase policies for protection in case of fire and theft. Although water losses are the most common type of loss that result in claims, most homeowners are unaware that not all water losses are covered. That said, it is standard that a "sudden and accidental" escape of water from a plumbing system causing physical damage is covered. However, take a look at this water exclusion from this policy and also the definition of "water damage":

If you are reading it as I am, here, even a "sudden and accidental" water loss under this policy is not covered! So, a homeowner with this policy cannot be compensated if a water line under the kitchen sink bursts and sprays water everywhere; or, if a hose to the washing machine suddenly breaks during a cycle and floods the house. Although homeowners as consumers can make their own decisions who insures their home or how much coverage they want, I believe that if a homeowner was made aware of an exclusion as expansive as the one above, he would really have to think hard about whether to accept that risk.

As always, educating the policyholder is vitally important and as a firm, through this blog, we try to make as much information available and share our knowledge.

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Comments (8) Read through and enter the discussion with the form at the end
Lorinda Mikesell - July 20, 2015 8:35 AM

Hi Chip:

I've been seeing less and less coverage with premium increases. I am appalled. I came across a policy the other day that had 5 perils only whereas the 1st peril was; Fire, 2nd peril, smoke. Can you believe that? My guess is the department of insurance is not regulating the surplus carriers. As always the consumers suffer.

Dennis McLamb - July 20, 2015 10:10 AM

Are you allowed to share the carrier(s) name?
954-873-6791 cell

Willie Blanco - July 20, 2015 12:08 PM

This is typical of policies such as TOPA, where you can add Water as a covered peril by endorsement. As always, Caveat emptor...Buyer Beware.

Tavisha Grant - July 20, 2015 12:31 PM

We're also seeing a limit of liability for water losses added to policies. Our office has handled several claims for clients insured with American Summit Insurance in Arizona. American Summit now caps their water loss exposure at $5,000. These clients have had to come out-of-pocket on the majority of the claim. They are not a surplus lines carrier. Somehow, the DOI has approved these forms. As you said, buyer beware!

Stanley K.Kaufman - July 20, 2015 2:55 PM

Having spent over 60 years in the insurance business I am very disturbed that less and less coverage is being afforded the insured.
There has to be a standard applied by the Dept. of Insurance in each state with minimum coverage requirements.
In California they have the basic policy Insurance code 2050 to 2071 but refer to endorsements since the basic policy covers only Fire lightning. In New Jersey it was in the 1950's when the first HO policy was written and prior to that separate policies for each major peril such as liability theft, etc.
The insurance industry is prostituting the overages by either limiting them or deleting them with no recourse from the DOI. Not even a single reduction in premium. The insurance industry is making more and more money than ever before.
My recommendation is that if the public will not do anything about the situation maybe attorneys and public adjusters, etc., on a "National Basis" can get together somehow, and do something about it.
What say you young ones -- Let's get it done. All it takes is a good leader. I would like to see Chip involved with a committee set up nationally.

Joe Wertz - July 20, 2015 6:13 PM


I just came across one from Foremost in Pennsylvania that excluded damage from rain, sleet and snow whether wind-blown or not. Whereas this wasn't exactly what you were describing I can't echo enough that the insured should read the policy before purchase.


Bill Wilson - July 21, 2015 1:32 PM

The vast majority of insurer advertising is price-focused. Consumers have been misled into believing that there is no substantive difference between insurance policies...if you're comparing the same limits and deductibles online for auto insurance, you're comparing identical products with identical servicing.

When insurers increasingly compete almost exclusively on price without regard to coverage, product interpretation, and claims service, the logical place to reduce product costs is coverage. After decades of broadening coverage, we're now seeing many insurers cutting back significantly.

Check out our web resource, especially the article "Price Check":

Christopher Green - August 6, 2015 4:42 PM

Another example of the carriers gradual shift to limit/exclude coverage. They are yet again, one step closer to their ultimate policy, which states, simply; "In the event of loss, NOTHING is covered"!

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