Water Damage Insurance: What It Is and How It Works

Key takeaways
* Water damage coverage in a standard homeowners policy usually applies to sudden, accidental events (e.g., burst pipes).
* Damage from gradual leaks, poor maintenance, negligence, and floods is typically not covered.
* Common covered events include burst pipes, plumbing failures, and appliance hose ruptures; sewer backups often require a separate rider.
* Watch for sublimits that greatly reduce available coverage for water-related losses.

What water damage insurance covers

Most homeowners insurance policies include protection for sudden and accidental water damage. Examples of typically covered events:
* Burst or ruptured pipes
* Sudden leaks from plumbing supply lines
* Failures of water heaters or washing machine hoses when the damage is abrupt
* Water damage that results from a covered storm-related event

If the policy includes replacement-cost coverage, repairs or replacements are paid at today’s prices. If it pays actual cash value, depreciation is deducted from the payout.

What is not covered

Standard policies generally exclude:
* Damage from long-term seepage, gradual leaks, or neglected maintenance
* Flooding from natural floodwaters (flood insurance is usually a separate policy)
* Damage resulting from homeowner negligence or failure to repair known issues

Note: Mortgage lenders typically require homeowners insurance but do not require separate “water damage insurance.”

Claims, frequency, and costs

• Water and freezing losses are among the most common homeowners claims. From 2017–2021 water-related claims were a leading cause of loss, with an average claim around $12,514.
• About 1 in 60 insured homes files a claim each year for water damage or freezing.
• In 2021, water damage accounted for roughly 23% of homeowner claims (wind/hail and fire/lightning represented larger shares).

Warning: Some policies include sublimits for water damage (for example, a high overall dwelling limit but a much lower cap for water-related losses). Those sublimits lower premiums but can increase out-of-pocket costs when you file a claim.

Common types of water damage claims

• Plumbing system failures — burst pipes from freezing, broken valves, or weakened joints
• Drainage system failures — clogged drains or sewer backups (often excluded without a rider)
• Appliance-related failures — washing machines, dishwashers, or water heaters that rupture or leak
• Toilet failures — supply-line breaks or backups that overflow into living areas

Sewer or sump pump backups often require an endorsement (additional coverage) to be covered.

Mitigation and prevention tips

• Have older homes inspected by a licensed plumber every few years.
• Replace aging water heaters and consider installing overflow pans with drains.
• Use steel-braided supply lines for washing machines and toilets.
• Turn off water supply lines to appliances when not in use; avoid running dishwashers or washing machines when no one is home.
• Address small leaks and drips promptly to prevent mold and larger structural damage.

FAQs

Q: Will homeowners insurance cover a slow leak discovered months later?
A: Usually no. Most policies exclude damage from gradual leaks and poor maintenance. Sudden and accidental leaks are more likely to be covered.

Q: Does homeowners insurance cover sewer backups?
A: Not always. Sewer backup coverage is commonly offered as an add-on (endorsement) and may be necessary if you want protection for that risk.

Q: What’s the difference between actual cash value and replacement cost?
A: Actual cash value pays the item’s value after depreciation. Replacement cost pays the amount needed to repair or replace the item at current prices, without depreciation.

Bottom line

Homeowners insurance can cover many types of sudden, accidental water damage, but it generally won’t pay for losses caused by neglect, gradual leaks, or flooding from natural sources. Review your policy for water-related sublimits and consider endorsements (for sewer backups or extended coverage) if you need broader protection. Regular maintenance and simple precautions can greatly reduce the risk and cost of water damage.