Co-author – Regina Collins
Homes are complex structures. Inside the foundations, walls and roofs of our homes are layers of pipes, wires, insulation and engineering all designed to keep them functional. But, most of us don’t really know what’s going on below the surface, and often times, this is where insurance claims can run into a little difficulty, particularly when it comes to water damage.
What is water damage?
There are a number of ways in which damage can occur to a home from water. Sudden or accidental damage, most commonly from burst pipes, sewer or water backup, water overflow, floods or storms are among the most commonly reported.
The types of water damage are often divided into ‘sudden and accidental damage’, which is often covered by insurance providers, or ‘gradual water damage’, which usually is not.
What is gradual damage?
Gradual damage refers to damage that might start small but is visible, whether the home owners are aware of it or not. This kind of damage can include mould, rot or corrosion.
It can also include:
- leaking taps or pipes
- damage caused by seepage coming in from cracks in the foundation or at the exterior of the house
- deteriorating roof or roof parts that indicate the need for repair
- deteriorating electrical wiring
- poor repairs or evidence of a lack of repairs to the home.
Insurance policies are generally designed to cover sudden and accidental damage. By definition, sudden and accidental damage means that whatever happened should not have been the result of damage over time.
While water damage is one of the most common home emergencies, filing an insurance claim isn’t always successful. This can be due to a water damage clause present in a number of home and contents insurance guidelines.
What is a water damage clause?
Water damage clauses feature in many home insurance providers policies. It states what kind of specific water damage you are covered for under your chosen policy. Such clauses can exclude certain types of water damage from the cover, such as flood due to a homeowner’s negligence or failure to maintain home repairs such as gutters and roofing.
This is important to take note of, particularly if you live in an area where water damage may be a reoccurring issue (e.g. flood, storm and cyclone-prone areas) as you may need to purchase extra coverage. For example, you should be aware if the land on which your home is located lies within a flood zone. If it does, the insurance company could be within its rights to deny your water damage insurance claim if the damage was caused by flooding. Your local council should be able to provide you with flood zone maps for your area, to help you decide whether you would like to purchase additional flood insurance.
How to make a water damage claim
To file a water damage claim through your home and contents insurance, you can follow these steps:
- Contact your home and contents insurer immediately.
- Provide as many details about the water damage as possible. If you can, try to take photos of everything that was affected.
- Make an effort to get the leak under control. You should not claim on any damage restoration until the insurer has assessed the situation but you should take steps to prevent further damage.
- Your insurer may send someone to survey your property and give you a quote for repair costs.
- Obtain your own estimates to determine the true cost of restoring or replacing your damaged property. A minimum of three independent estimates from qualified general contractors should be obtained.
- If approved, your insurer may then talk to you about sourcing materials and the legislative requirements needed to make repairs.
How to improve your chances of a successful claim
While there’s no guarantee, there are a few ways to give your claim a better chance of being accepted:
- Conduct regular maintenance on your home, ideally at least every six months. This includes inspecting hoses, washing machines, water heaters, dishwashers and refrigerator ice makers for wear and tear.
- Maintain records of repairs and the professionals you have hired over the years to do maintenance. This is a very important habit when it comes to making a claim.
- Be careful when moving dishwashers, washing machines, refrigerators and other electrical water devices not to crimp a water hose or pull it loose.
- Draining water heaters every six months can help to prevent residue build-up.
- Make sure you understand all the coverage and exclusions on your policy, paying particular attention to the PDS.
What to do next
Insurers are required to comply with the General Insurance Code of Practice of which Section 7.10 states that an insurer must decide to accept or deny your claim within 10 business days of receiving the claim. If the insurer decides it needs further information or an assessment to decide your claim, then the insurer must notify you within 10 business days of receiving the claim:
- What further information is required;
- If a loss assessor needs to be appointed;
- An estimate of time required to make a decision.
If you were denied your claim, you can request a full explanation. You have every right to understand exactly what part of the policy wording excludes your claim, and why the claim is being denied.
Compare home and contents insurance
Another way to help cover yourself for water damage is to purchase insurance that caters specifically to your needs, and enquire about extra coverage you can add that may be useful to you.
Please note these results are based on policies in NSW and ACT for a policy holder under 50 with building and contents worth below $550k with links direct to the providers site. Click here to compare policies for your circumstances.