I just wanted to take a moment to discuss an issue that has occurred to our client base a few times over the past summer: water backing up into a property through a sewer or drain. The water backup typically happens during a heavy amount of rain because a city sewer system cannot keep up with the water flow, a sump pump malfunctions or cannot run because the power is out, or the system malfunctions because it cannot handle a heavy volume of water.
Coverage is typically not included on the basic homeowners policy, which means the policyholder has to buy the coverage back in an endorsement if they would like coverage. This endorsement is usually sold in increments of $5,000, with the most common limits being $5,000, $10,000, and $25,000. If you do not have a finished basement, the coverage would be there to cover mechanical appliances typically found in the basement (furnace, water heater, washer/dryer, etc.), but it could also cover personal property that is stored. On a finished lower level, you also have other concerns such as carpeting, furniture, and drywall in addition to the things mentioned above.
In the insurance industry, we have seen a shift in how this type of claim is handled. Most carriers partner with mitigation companies who specialize in cleaning up the damage. They have the technical expertise to dry out the space and can make sure that mold and other contaminants will not be a concern moving forward. In the long run, this is a positive change and the contaminated water can be cleaned up correctly which will result in fewer future issues. However, the drawback that comes with the expertise is the high expense it brings.
For quite some time, we have written a lot of coverage where $5,000 and $10,000 water back up has been adequate. We really feel that if you have any type of finished lower level, we should review and look for limits of $10,000 (minimum) and potentially even a limit of $25,000. With the cost of the mitigation increasing, we have had several claims where the $5,000 and even $10,000 has not covered the entire loss.
As always, if a situation like this occurs to you, give your agent a call to review the coverage limits. We are happy to have a conversation with you to make sure that your policy is structured correctly for all potential risks.
Thanks again for the opportunity to protect your families.