Are personal insurance policies simple and interchangeable commodities? Certainly not. The risk and claims associated with sewage back up become a nightmarish reality for many homeowners every year. The following losses have recently been in the news.
- Due to sever flooding in Washington DC, over one thousand homeowners experienced 6–12 inches of sewage flooding in their basements.
- Nearly five hundred homeowners in Moyock, North Carolina, suffered a sewage backup, forcing them to leave their homes. The town's sewage system is old, but questions about liability and governmental immunity remain.
These are just two large scale examples, but we see many local stories every year. Insurers often do not pay these losses due to various restrictions in the homeowners policy. Sadly, most homeowners are not aware of these exclusions and restrictions until after the claim occurs. For these reasons, your agent should include this coverage and explanation into your homeowners policy or at the least offer and recommend a water backup, overflow endorsement. The endorsement should cover water damage, remediation, and clean-up costs.
Another policy concern is a low limit of coverage. In new client policy reviews, we often find $5,000 limit of liability for Sewer backup damage in many standard policies. However, sewage back-up correction and remediation can easily cost a homeowner anywhere from $10,000 to $80,000 or more. To reduce coverage gaps, you should opt for protection that is indicative of the possible loss you may experience. A finished basement in luxury homes is very different that an unfinished basement in a cottage.
Not all policies are created equal. Do you know how your policy would respond if you filed a sewage back up claim ? It’s important to review your policy on an annual basis to ensure you have proper coverage for all of your everyday risk exposure.