It is safe to assume that most people know what a flood is, and they are familiar with the kind of damage that a flood can do. People also know what water damage is, and can differentiate a property that has water damage from one that does not. But how many people know the difference between water damage and flood damage when it comes to insurance, coverage, and claims?
Not many people know the difference, which is why many people mistakenly use the terms “water damage” and “flood damage” interchangeably. But there are, in fact, some very important differences when it comes to your insurance coverage and your ability to get proper reimbursement when your property is damaged.
So, how do you tell the difference?
One way to remember if something is considered water damage covered under your homeowner’s policy, or flood damage covered under your flood insurance policy, is to ask: Does the water fall from above, or does it rise from below?
This is a very basic question, and may not apply to all circumstances, but it will help you understand the most common differences. If the water comes from above, it may be covered under your homeowner’s policy. If the water rises from below, it may be covered under a flood insurance policy.
Let’s illustrate the differences between Water Damage and Flood Damage with a couple of insurance-related examples.
- Water damage claim coverage, under your homeowners policy: A large rainstorm hits the coast of California, causing roofs, windows, and walls to leak. The water enters the buildings from the roof and windows and causes damage to personal property, floors, walls, roofs, and basements. The resulting damage may be covered under a typical homeowner’s policy if water damage is a covered loss. But a flood insurance policy would not cover this damage.
- Flood damage claim coverage, under a flood insurance policy: If that same storm causes streets to overflow with water and the resulting flood causes damage to real estate or personal property, the appropriate (personal contents and/or building coverage) flood insurance policy will cover the damage. As you might expect, a homeowner’s policy would not.
Flood damage is not typically covered under a homeowner’s policy, but it can be purchased through agents enrolled in the National Flood Insurance Program (NFIP) Direct program. Flood insurance used to be covered by homeowners insurance companies, but the unpredictability of flooding made it too expensive for insurance companies to continue offering it. In 1968, Congress created the NFIP to pay for flood claims that insurance companies didn’t want to cover. Flood insurance premiums are paid by policyholders, and claims are paid through FEMA (Federal Emergency Management Agency).
It is important to note that you can purchase flood insurance, but there is typically a 30 day waiting period before flood damage coverage goes into effect. So don’t wait until you hear that a terrible storm is going to hit your area before you purchase flood insurance.
Covered Losses from Water Damage: Available for Business Owners and Homeowners with Structural and Contents Coverage
- Burst water pipe: This is generally covered if the pipe suddenly broke and wasn’t leaking beforehand. If you knew that the pipe was leaking and didn’t fix it, you probably won’t be paid for the water damage because you would be considered negligent.
- Appliance water damage: If your washer or dishwasher leaks and causes damage, then it will likely be covered. But, as in the example above, if you knew there was a leak and didn’t fix it, there probably won’t be any coverage.
- Leaky roofs: These are generally covered, especially if it is caused by something else that is covered under your policy, such as wind damage. But, if you failed to fix a bad roof and it leaked when it rained, you most likely don’t have coverage for the water damage.
- Miscellaneous: Some insurance companies will offer additional coverage for water damage claims. Look at your policy to see what you have, and consider purchasing additional coverage to cover potential losses.
Covered Losses from Flood Damage – Available for Business Owners and Homeowners with Structural and Contents Coverage
- Surface Water Damage: Rapid accumulation or runoff of surface waters, regardless of the source.
- Overflow Water Damage: Overflow of tidal or inland waters.
- Mud Damage: Mudflow, defined as a river of liquid and flowing mud carried by a current of water on the surface of the normally dry land.
Note: Flood policies do not cover damage caused by earthquakes; landslides; sinkholes or land subsidence; or gradual erosion.
Unsure of the source of your water damage? File a claim anyway.
Insurance is a complicated field and is difficult to understand. Insurance policy wording can be confusing, and contradictory. Even legal and insurance experts sometimes have difficulty interpreting what is and is not a covered loss.
If you are unsure of the source of your water damage, it’s better to be safe than sorry. File a water damage claim with your insurance company, even if you aren’t sure if you will be compensated.
“Bad Faith” of Insurance Companies Paying Damage Claims
Insurance companies have also been known to act in “bad faith”, telling insureds (insurance policy owners) that they don’t have coverage for things they do in fact have coverage for. That’s why it is important to either understand your insurance policies or have someone you trust to explain it to you.
If you have been denied coverage for a water damage claim under your homeowner’s or flood insurance policy, consider talking with an attorney. At the Smythe Law Group, Inc. we understand how insurance companies think, and will fight to make sure you are being treated fairly. Get your free consultation today, and let us help you resolve any dispute with your insurance company.