Insurance companies scaling back water damage coverage

Homeowners have not been very profitable for insurance companies historically and the recent weather events (hurricanes, floods and tornadoes) have caused them to lose money. As a result, companies have looked for ways to squeeze profit from policies and may be squeezing homeowners as a result.

For example, it has come to light recently that many companies are not writing new policies in hurricane areas, especially Florida. But insurance providers are also cutting coverage in ways that are not covered by the news; that affect homeowners across the country; and that you may not know about until it’s too late.

The 14-day rule

Many insurance companies have quietly changed their policies over the past few years. In days past, if a slow leak developed in your plumbing, which is capable of causing extensive floor and drywall damage and mold growth, you didn’t have to worry about being covered.

Damage caused by a single event, like a dishwasher whose valve fails and flooding your kitchen, is covered. Many insurance companies have instituted the 14-day rule. In many cases, the source may be hidden behind a wall or foundation. Also, the evidence of the leak does not show itself immediately. If the leak occurred over more than 14 days, chances are you may not be covered.

What you should do

On your side, watch your water bill; an unusually high bill may point to a big leak. Keep a watchful eye for evidence of water damage, particularly around sinks, tubs and toilets. You may also consider buying wireless water alarms. They are inexpensive and will go off at the smallest leak.

Most people don’t read their policy. If you have a new policy or recently renewed your policy, call your agent and ask about coverage for such events. They may advise you to increase your coverage. The important thing is to know what your policy covers and what it doesn’t. That’s not the kind of surprise you want.

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