What is water damage liability insurance?
Water damage liability insurance refers to a type of policy that provides financial protection to a person or business that unintentionally causes water damage to the property of another.
For individuals, water damage liability insurance and its cost are usually included in renter’s, homeowner’s and condominium’s insurance policies.
Key points to remember
- Water damage liability insurance is a type of policy for individuals or businesses that protects them, if they cause unintentional water damage to someone else’s property or possessions.
- This type of insurance is usually part of a home or renter’s insurance policy.
- To be covered, water damage must generally be caused by a sudden event or accident.
How water damage liability insurance works
Water damage liability insurance is a type of liability insurance. Liability insurance is itself a type of coverage that protects a person or business from the risk of being sued or being held legally liable, i.e. responsible-for something. Liability insurance policies can cover both legal costs and any statutory payments in the event of destruction, damage or injury, even inadvertent, for which the insured is deemed responsible.
There are various situations where water damage liability insurance could help protect an individual from huge costs. If the owners of a second-floor condo suffered a water heater explosion, for example, and the water seeped into the first-floor units, water damage liability insurance would protect the owners. of the condo on the second floor by providing the money to repair the damage to the units on the ground floor. If the owners of the second floor condo did not have water damage liability insurance, they could be held responsible for the cost of repairs.
Home policies and water damage liability insurance
home insurance policies typically include legal liability for water damage, either as part of personal liability coverage or in a separate endorsement. Generally, water damage must be the result of a sudden event or accident, something unforeseen and inadvertent, such as a leaking air conditioner, a burst pipe, a faulty washing machine, or the rupture of the aforementioned water heater. Liability extends to damage, destruction or injury to structures, property or even people of others.
However, if the triggering event and the resulting water damage are caused by poor maintenance, fault or willful negligence, the liability cover may not apply or your insurance company may deny the claim.
How to increase or improve your coverage
Not all policies include water damage liability insurance, so it is important to read the insurance contract carefully. A more common problem, however, is not the existence of coverage, but its extent. Most standard homeowner policies provide a base liability limit of $300,000 for property damage or personal injury; this amount can be increased (subject to an additional premium, of course), but often up to a certain limit.
If you want broader liability coverage than that provided by your home insurance, you can purchase what is commonly called a umbrella insurance policy. Liability insurance makes payments on behalf of the policyholder for home and automobile accidents, as well as situations involving defamation, slander, vandalism, or invasion of privacy. The policy also covers accidents occurring in secondary or seasonal residences, in recreational vehicles, on the premises of rental propertiesor on a boat or craft belonging to the policyholder.