Does Home Insurance Cover Water Damage?

Homeowners insurance policies have three basic categories. HO1 policies are the least expensive, but they also carry the highest deductibles and have the most exclusions for water and other types of damage. In the middle are HO2 policies, which are the most common because they still have reasonable rates but have lower deductibles and cover more types of damage or loss. HO3 policies are on the high end of the spectrum, carrying the lowest deductibles, but with the highest rates. HO3 policies usually have the least restrictive exclusions as well.

Both HO2 and HO3 policies will cover a water damage claim in most cases if the damage is caused by an internal water source. That means if a pipe bursts or your washing machine or air conditioner leaks, the damage will most likely be covered. However, the cost to replace the faulty pipe or washer is usually not covered in your policy.

On the other hand, if water enters your house from outside, like in a flood, that type of damage is not usually covered by a standard homeowners insurance policy. A separate flood insurance policy needs to be in place to make sure you’re protected in the event of flood damage. If your house is in a high-flood area you may be required to have a flood policy. Ask your insurer if they participate in FEMA’s National Flood Insurance Program.

Whether from a burst pipe, flood, or faulty appliance, the cost of clean-up and repairs can be more than you expect.