After you buy your first home, trying to understand your home insurance options isn’t easy. There are coverage excursions, property requirements, and multiple kinds of policies.
Property coverage can be especially confusing when looking at water damage, flooding, and foundation repairs. For example, homeowner’s insurance typically covers floods that originate indoors, such as a plumbing problem. On the other hand, flood insurance is focused on floods from external sources such as hurricanes, storms, and rivers.
In this essential guide to flooding, home insurance, and waterproofing, we’ll break down exactly what you need to know about water in your home.
Which Type of Property Insurance Covers Which Water Problem?
We’ve previously covered the basics of insurance including what’s covered by homeowner’s insurance and why you might want to buy flood insurance. But let’s talk about the murky area of water damage. It can get complicated to understand coverage options. In addition to these general guidelines, your insurance agent can help you understand the specifics of your policy.
Flood insurance is available through the National Flood Insurance Program (NFIP) or a private insurer. Coverage is limited to situations when the source of the flood was external to the house, such as a weather event. Two types of coverage give you options to protect your personal property and the structure of your home.
Flood insurance plans with building coverage will protect your home foundation, anchoring systems, furnace, water heater, and other permanent fixtures. Coverage of foundation damage is especially important for floods. For example, during a hurricane storm surge, each cubic yard of seawater has a hydraulic impact similar to a live oak tree crashing into your foundation.
The federal government may require you to purchase flood insurance if your home is inside a high-risk flood zone. Some mortgage companies may also require flood insurance for homes outside the flood zone.
Homeowner’s insurance policies cover a wide range of damage and disasters. However, it usually only covers flood damage when it originates indoors such as a burst water pipe.
Many water problems in a basement or crawl space are tied to foundation problems. Homeowner’s insurance generally doesn’t cover foundation problems from construction issues, settling, floods, or droughts.
Another fine line is sewage problems. If you have a septic system on your property, homeowner’s insurance may cover any damage. However, it probably won’t cover damage that was caused by a city sewer line.
Water and sewer line insurance may be available as an add-on from your homeowner’s insurance provider. This could protect you against flood damage that originates from your city’s sewer pipes and water pipes.
For new homes, a builder’s home warranty is another way to protect against foundation problems, associated water damage, and structural issues with a basement or crawl space. Small cracks in walls or floors are not typically covered. However, you could qualify for free foundation repairs.