aged property—the walls, floors, tiling,
and carpet—areas that got saturated
and need to be repaired or replaced.
Even tearing out a wall, for example, to
get to a leaking pipe is covered. What is
not covered is the leaking pipe itself. A
pipe leak is often caused by simple wear
and tear or age of the system, and that
is a maintenance item. However, even
if the insured is hanging a picture and
pokes a hole in a brand new home and
new pipes, the damage to the pipe is not
covered. The exclusion for damage to the
item causing the loss is all encompassing, and has no exceptions.
As we mentioned earlier, coverage
would not apply for overflow resulting
from the failure of certain equipment,
such as sump pumps. However, this
is precisely where a lot of losses occur.
Sump pumps may fail or be unable to
handle the flow of water during a severe
storm or flood, and sewers or drains may
back-up because of a stoppage in the
flow. Overflows are excluded for sumps
because that is a common cause of loss;
the sump cannot handle the volume of
water it receives. For example, if the
drain backs up and overflows because of
heavy rainstorms, then that is not covered under the policy.
To provide coverage for this occurrence there is the Water Back-up and
Sump Discharge or Overflow endorsement, HO 04 95. This provides $5,000
of coverage for back up through a sewer
or drain or overflow or discharge of a
sump, a sump pump. or related equipment, even if the equipment suffers a
mechanical breakdown. For example,
the sump pump motor burns out and
the basement floods; there is $5,000 of
coverage for that damage. The coverage
is for water or waterborne material, so
coverage is provided for damage caused
by items floating in the water. This coverage does not, however, increase the
limits of liability for coverages A, B, C,
or D in the homeowners’ policy. This
takes the problem of defining back-up
or overflow out of the equation of certain losses, since the endorsement provides the coverage that is excluded in
the main policy itself.
Water, whether it be from pipes, sewers, sumps, or floods, is one of the bigger
issues in homeowners policies. There is a
lot of confusion surrounding what is and
is not covered. Once you consider the
definition of the terms, you are on your
way to understanding the coverage. As
always, policy language rules the day.
Christine G. Barlow, CPCU is an associate
editor with FC&S®, the premier resource
for insurance coverage analysis. She has
an extensive background in insurance
underwriting. She may be reached at
firstname.lastname@example.org. Additional information about FC&S Online is available at
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