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A flooded basement is one of the most ambiguous insurance situations a homeowner can find themselves in. Some situations are covered by home insurance, while others require special types like flood insurance or an endorsement. Below we discuss the most common ways your basement can flood, and which type of insurance you would need in each case, and whether you are covered.
When does homeowners insurance cover a flooded basement?
There are numerous reasons your basement could flood. If any of the following happened in your basement, you would likely be covered if you have a standard home insurance policy.
Flood Caused by Broken Appliance
If the washing machine, AC unit or refrigerator in your basement malfunctions and floods the entire room, the water damage is typically covered under a standard homeowners insurance policy. However, there is a chance that your insurer could argue that the damage was a result of lack of maintenance. If they can prove the appliance broke because you hadn't taken care of it for a while, they can deny your claim. A truly faulty appliance malfunction will always be covered however.
Note that the cost of the new appliance itself won't be covered under the claim. So, to be clear: the flooding caused by the broken appliance is covered, but you have to buy the new washer or unit out of pocket.
Flood by Leaking Water Heater
Damage from a leaking water heater is covered under the same provision as leaking appliances. Again, you must be aware whether the water heater is leaking as a result of neglect or malfunction. If your insurer finds any proof the cause of the leak was poor upkeep on your part, your claim will be denied.
Freezing Pipes Burst
If one winter night the temperature drops and your pipes burst from the freezing water, your home insurance policy would cover the damage of that flood. Burst pipes from an AC unit, sprinklers and appliance are also covered if they freeze. The main condition is that you have to be living in the home while it was flooded.
The only exception is if it can be proved you were still maintaining the home with heat or turned off all the water systems—common when homeowners go away for a winter vacation. This is something you should consider if you have a secondary home in a cold climate.
Flood Caused by Overflowing Tub, Pool, Sink, Etc.
You may be surprised that if your basement is flooded as a result of an overflowing tub, pool, sink or any other receptacle for water, you would be covered by your home insurance policy. Such a calamity is considered "sudden and accidental" and your insurer will foot the cost for replacing what was destroyed. So, if your child decides to fill the toilet in the basement with all the toilet paper in the house and proceeds to flush a bunch of times, home insurance will typically cover the resulting flood damage.
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When doesn't homeowners insurance cover a flooded basement?
Unfortunately, there are also situations where if your basement is flooded you would not be covered by a homeowners insurance policy. The following situations are not covered by a standard home insurance policy:
Rising Water from a Storm, Surge or Heavy Rains
Essentially, any flooding caused by nature will not be covered under your home insurance policy. For all rising water situations only flood insurance can save your basement--and even then coverage is limited.
Flood insurance covers certain objects in your basement like most personal belongings and appliances, but typically won't cover the structure, such as finished ceilings or floors. When you take out a flood policy, you need to purchase both dwelling and contents coverage to get the maximum coverage for your basement.
The best defense against a flooded basement is a functioning sump pump that pushes water out. Preventing a flood from occuring in the first place will usually be the cheapest and least disruptive option, especially if you have a finished basement. If your sump pump fails as well, there is additional "sump pump coverage" you can buy as part of your home insurance policy that ensures your basement up to $25,000 in case of pump failure. Of course, it would have to be a malfunction and not a result of poor upkeep of the system.
If an external sewer system backs up into your home and basement, your insurance will not cover the resulting damage. Sewage backup can be one of the most costly disasters that can befall a home, and there are few ways for homeowners to recoup their losses should it happen.
Most home insurance companies do offer an endorsement for sewage backup, and it is relatively inexpensive, but only covers you up to $10,000 worth of damage. That's not enough monetary protection in most cases. Sewage backup can easily cost hundreds of thousands of dollars to repair.
Water Seeping from Underground
This is a tough case for a homeowner to be in, because this situation is generally not covered. After a period of heavy rain, the ground can become saturated with water, and that water can seep through the ground into your basement. Homeowners insurance companies do not consider this a coverable calamity.
Flood insurance also won't cover it unless the seepage is directly related to a flood in the area. The best defense against this disaster is to make sure the foundation of your home is solid and up to date on all inspections.