Water damage is one of the most common causes of home insurance claims. According to ISO, Water damage claims are the second largest frequent insurance claim, following wind and hail damage. The percentage of claims due to water damage is also increasing, while other causes of damage have stayed fairly consistent or even decreased. It’s no wonder people have a lot of questions about water damage and what is covered on home insurance, and why things, like “gradual damage” are not covered.

Things get even more complicated when we look at the exceptions. Here’s a review of some water damage claims situations to help you understand, you can click on any of the links to get more information on a specific type of coverage.

Types of Water Damage 

There are many types of water damage that may be covered or excluded on a home policy such as:

• Sudden or Accidental Discharge
• Sewer backup or water backup
• Overflow
• Flood
• Storm Related Water Damage Covered by Insurance

You can read more about how or if each of the water damage coverages listed are covered on home insurance here.

Common Questions: What Water Damage Is Covered by Home Insurance?

There are some common questions people ask about what their home, condo or renter insurance covers, fro water damage, here are a few of the most common questions:

• Is a water leak covered by home insurance?
• Is a leaking toilet covered by insurance?
• Is water damage from a leaking roof covered by insurance?

The answer to whether these are covered or not depend on the source of the damage, the type of policy you have and if the water damage is accidental and sudden or gradual.

Gradual damage water damage is not usually covered, so although your policy might have water damage coverages, if the reason for the damage is not sudden and accidental, then you may be denied in a claim.

Gradual damage is when something happens slowly over time and causes damage to your property. Gradual damage due to water damage is a common problem when it comes to insurance claims.

An example of gradual damage is when something happens slowly, like paint chipping off a wall it starts with a small chip, then eventually half the wall is uncovered.

Water Damage and Gradual Damage in Your Home

Homes are full of nooks and crannies, pipes, electrical wiring, ventilation systems. Homes are complex structures, and for the most part, the only parts we see in our homes every day are the inside walls, the decorations, and our contents. Underneath it all, there are layers of activity, all making your house run. Without proper maintenance and regular verification of the key components in your home, anything could be going wrong under the surface, and you would never know until the damage causes structural changes or some physical evidence. That’s when we try and make a claim. If the damage is not sudden or accidental, but is the result of a long-standing problem that went undetected you will have a problem in a claim.

What Are Examples of Gradual Damage?

Some of the most common examples of gradual damage causing losses or denied claims are:

• Plumbing, faucets or pipes leaking causing damage to the walls, ceilings or floors .
• Water damage caused by seepage coming in from cracks in the foundation, or at the exterior of the dwelling allowing water to enter your home.
• Flashing, tiles, shingles or deteriorating parts on the roof that indicate signs of needed repair.
• Mold, rot or corrosion
• Deteriorating electrical wiring
• Poor repairs or lack of repairs to home

It is often hard to understand why a claim gets denied, and one of the most popular reasons for a claim to be denied is when you try and make a claim for something that suddenly appeared to you, but is the result of something that has been happening for a while.

Insurance is meant to cover sudden and accidental damage. By definition, sudden and accidental damage means that whatever has happened, should not have been the result of damage over time.

Our home insurance covers you from sudden, unexpected losses that you can’t prevent. But our customers are sometimes frustrated at claims time when they discover that they’re not covered for gradual damage.

Nobody likes to learn that their cover for certain things is limited, and gradual damage is an area where many customers ask – why aren’t I covered?

So how does it all work?

Gradual damage – what is it, and why isn’t it covered?
The first thing you need to remember is that insurance isn’t a maintenance contract. It’s there to help you recover from sudden, unexpected losses that you couldn’t prevent.

Gradual damage is deterioration that occurs over time, and insurers usually exclude gradual damage from their policies.

Why? Insurers have to balance the need to provide cover for our customers, with keeping premiums affordable for as many people as possible. If insurers covered faulty installation or maintenance, insurance could become less affordable.

There’s one exception – hidden water damage
Say a pipe under your upstairs shower has been leaking for months, but you couldn’t see it. Then one day, you notice water stains and bulging in the ceiling below, and you realise you’ve got a problem.

We know even our most house-proud customers can’t see through walls, so if you discover a hidden leak, we can help you cover the costs of the damage it caused.

How can we help?

Under Vero home insurance policies, you can claim up to $3,000 to help you clean up the damage caused by hidden leaks. You may be able to put some of that money towards finding the source of the leak or overflow – but you’ll need to talk to us about that first.

Repairing the problem

You can claim to clean up the damage – but if you’ve got a hidden leak, in most cases you will need to pay for the repairs to your pipes or water fixtures to stop the cause of the problem. Unless the leak itself was caused by a sudden, accidental event, repairs aren’t usually covered by your insurance policy, because it’s considered ordinary maintenance for your home.

Letting us know

If you discover a hidden leak – which you’ll often only discover if you get a lot of mould or bulging walls or floors – you need to let us know right away. If you let the leak continue to cause more damage for an extended period after you discover it, you may find you’re not covered.

Top tips for preventing damage
It’s important that you keep your home in good repair and do what you can to prevent damage.

If you are getting any plumbing or installation done around your home, make sure it’s done by a reputable tradie. If your plumbing or the installation of pipes or water fixtures is faulty, this may cause problems at claims time.
If you think your home’s hidden pipe and cylinder systems might be leaking, the best thing you can do is check it out as early as possible, before it causes too much damage.
If you need practical advice, you can call Vero’s toll free HELP line 0800 800 786.

When is damage not damage for insurance purposes? The answer: When it’s gradual.

Many homeowners are being left frustrated when they try to make a claim on a house insurance policy and find they are not covered because the damage is deemed to have occurred over time.

Most insurance policies rule out any deterioration that happens gradually, such as erosion by weather or rotting due to exposure to moisture.

Jimmy Higgins, executive general manager of claims at Vero, said insurers had to limit what they could offer to cover, to keep insurance affordable.

“The first thing you need to remember is that insurance isn’t a maintenance contract. It’s there to help you recover from sudden, unexpected losses that you couldn’t prevent,” he said.

“Insurers have to balance the need to provide cover for our customers, with keeping premiums affordable for as many people as possible. If insurers covered faulty installation or maintenance, insurance could become less affordable.”

Homeowners are expected to pick up on gradual problems through their regular maintenance of the property.   But an AA Insurance survey found up to a third of homeowners were not aware of the maintenance obligations placed on them, or how that could affect their cover.

Terry Jordan, from the Insurance Council, said “gradual damage” was a common reason that claims were declined. “It’s something they don’t understand very well, people can’t get their heads around it.”

Insurance and Financial Services Ombudsman Karen Stevens agreed it was an area that was confusing for some customers. Her office receives frequent complaints from customers who have been turned down for a claim because the insurer ruled it was caused by gradual damage.

“Consumers often misunderstand the cover, because policies do not define ‘sudden’ or ‘gradual’,” she said.

“To establish what gradual means is always difficult; depending on the specific factual circumstances…There is no definitive timeframe you can rely on.  The main issue for consumers is that they will usually discover the damage suddenly and think they have a valid claim.  However, the real issue is whether the cause of the damage was sudden or gradual.

“Fire, earthquake, storm and flood are examples of events that can cause sudden damage.  Water leaks, on the other hand, are examples of gradual damage that cause damage over time as building materials get wetter and wetter, like a bathroom floor ‘suddenly’ developing a spongy area or a hole, due to long-term leaking waste water under the shower unit spreading under the floor.”

A pipe that suddenly bursts would be covered by insurance but one that slowly leaks would not. Stevens said it would not matter if the damage had been done without the homeowner being aware.

The only exception is hidden water damage. Many insurers cover water damage from a leaking internal water or waste disposal pipe that a homeowner could not have been expected to see, up to a limit such as $2000 or $3000.

“Say a pipe under your upstairs shower has been leaking for months, but you couldn’t see it. Then one day, you notice water stains and bulging in the ceiling below, and you realise you’ve got a problem. We know even our most house-proud customers can’t see through walls, so if you discover a hidden leak, we can help you cover the costs of the damage it caused,” Higgins said.

But most policies do not provide cover for the cost of locating the leak. Stevens said insurers generally would regard such cost as part of the pipe repair, which is excluded from the policy cover.

Higgins said it was possible for customers to claim some of the cost of finding the leak in some cases, but they would need to discuss that first.

In one case dealt with by Stevens’ office this year, a couple made a claim under their landlord insurance policy when their tenants discovered a leak that had caused damage to carpet and skirting boards. A loss adjuster advised that the leak would have been happening for at least four weeks and the claim was declined.

Their complaint against the insurer’s decision was not upheld – Stevens’ office ruled that while the discovery of the damage by might have been sudden, the policy wording referred to how it was caused, not how it was discovered.

 – Stuff

We’re often asked why some things are covered by insurance while others aren’t, like the damage caused from a leaky tap. So we thought we’d explain it here with a few examples.

As you know, insurance is all about covering accidental or unforeseen damage or loss. For example you clip the gate as you reverse your car out the driveway, the wind hurls your trampoline into the living room window during a storm, or you drop your mobile phone. These things are covered by insurance because they weren’t meant to happen, they weren’t done on purpose, and you couldn’t have foreseen them occurring.

There are other kinds of damage that you can avoid though, such as gradual damage or damage that happens over a period time, regardless of when you discover it. So, just because you’ve only just noticed that the shower floor has a hole in it, doesn’t mean it has just happened. These kinds of things generally take time to build up and offer a few clues that you shouldn’t ignore, such as a squidgy floor or the water bill going up. So, it’s important to remember that sometimes insurance doesn’t cover you if you continue to ignore the signs.

Let’s take the example of one customer who heard a dripping noise in the bathroom and thought it was the tap. She later discovered the source of the noise when someone pointed out that water was dripping from her ceiling. She pierced some holes in the ceiling to let it drain, but a substantial amount of water poured out, with more dripping to follow from the bulging ceiling. A leaking pipe/valve meant the water damage extended across the entire bathroom ceiling and was beginning to affect that of the adjoining toilet. A week earlier she had noticed that skirting around the ceiling was pulling away but hadn’t looked into it further.

In this instance, our customer was covered by AA Insurance’s Resulting Gradual Damage benefit, because the source of the problem was hidden from view in the ceiling, and the customer could not have discovered the damage immediately, because it wasn’t obvious until the water started dripping. However, ignoring the clue about the skirting board meant her ceiling had deteriorated substantially and required considerable work to repair her home’s only bathroom.

If she was with an insurer who didn’t offer a gradual damage benefit, she may have had to pay for the entire repair out of her own pocket.  Alternatively, if the leaky pipe had been visible (such as the connection to a washing machine) but wasn’t fixed, causing the floorboards to gradually rot and break, then it’s unlikely to have been covered by most home and contents policies because it wouldn’t be considered unforeseen.

But what if you’re not living in the home, because it’s a rental? Well, here’s just one example of how a simple one-off event caused gradual damage. The tenants had overflowed either the basin or the washing machine in the laundry causing water damage to the floor.  However, they didn’t inform the landlord or property manager of what had happened. So the laundry deteriorated over time. No one could reach them after they left, to find out what really happened, but fortunately our customer had comprehensive landlord insurance for their rental.

These examples illustrate the importance of, not only having the right cover, but also maintaining your home or investment property. Even though it’s part of the conditions of your insurance, keeping your property in good nick really does save you time and money in the long run. If you, your tenants or property manager, notice something is broken, a funny smell, the sound of a drip or something unusual like a stain on the ceiling or mould growing, get it sorted quickly before it’s too late.