Is Your Water Heater Covered By Your Home Insurance Policy?
How old is your water heater? What happens if it bursts? Do I get a discount on my home insurance if I buy a new one? What is covered and what isn’t?
Today we shed some light on these questions. If you ever had a water heater burst in your house, you know it is NOT FUN! Walking downstairs to 2” of standing water, looking around like WHAT HAPPENED?!?!?!
Many of our clients have asked recently, is there a discount if I get a new water? There has been a recent increase in water use since COVID hit due to working from home has caused a spike in water heaters bursting.
Water heaters are supposed to last ON AVERAGE 10-12 years, after that they should be replaced. They get a buildup of sediment at the bottom depending on the mineral makeup of your water (each household is different). This sediment eats through the bottom of the tank. This is also why plumbers recommend that you FLUSH your tank ONCE A YEAR (don’t do this if you do not know when the last time it was flushed). This helps prevent the sediment from settling at the bottom of the tank and extends the life.
If you water heater bursts due to wear and tear the cost of the plumber and water heater/installation is NOT COVERED BY INSURANCE. Home insurance should cover the consequent damage caused by the water heater bursting but the appliance itself won’t be covered unless it was damaged due to a covered peril (will be outlined in your policy and each situation is subject to investigation).
Let’s walk through a scenario where your water heater bursts and the process of getting your house back to normal.
- You wake up to an inch or two of standing water in your house and start to panic. The first thing you should do is turn off the water to your entire house. You may not know where the water leak is coming from at first so check all of your appliances that use water, your sinks, and your water heater to look for signs of the source.
- Call a 24/7 plumber immediately. We recommend this step first because the quicker a plumber can get out there and diagnose the problem the quicker it can get fixed.
- Call a 24/7 restoration company. You may not realize it but every minute counts when it comes to moisture in your house, ESPECIALLY in Georgia where it is very humid and an optimal climate for MOLD to grow. The plumber will not clean up the mess just fix the leak; the restoration company will bring fans and vacuums to get the water out of your house and dry everything up ASAP.
- Call your insurance agent. They will help you get a claim started. There are a few parts to the claim that take place in succession that you will want to keep an eye on and understand.
- Mitigation
- Estimates for Repair
- Approval from Adjuster
- Payout for Mitigation and Repair
Mitigation is the steps you take to reduce the severity of the damage aka calling the plumber and restoration company out there the moment the incident occurs. It is your duty as the homeowner to mitigate further loss.
Estimates for Repair: Once you have mitigated the issue it is now time to repair your home back to the way it was. This is when you normally would use your restoration company to give you a quote (if they offer those services) to repair the damage. They will assess the affected areas and extent of damage and give you a full estimate to repair everything. MAKE SURE to review this estimate with a magnifying glass. Many companies will make mistakes and forget to include things (ex. Replace door frame – $100 but then they forget to include painting the door frame) that have a cost associated to it. If you accept the incorrect estimate and then the insurance adjuster approves it, you will have to go back to the insurance adjuster afterwards to get a supplement (an additional payment on top of what the adjuster has already approved)
Approval from Adjuster: Each insurance carrier will send out their representative called the insurance adjuster. Their job is to inspect the incident and damage and authorize repairs. The company fixing your house may not always see eye to eye with the insurance adjuster which is why it is wise and very important to choose the right company to perform this work. If they are not experienced with dealing with an insurance adjuster, they may not know what insurance covers which can end up costing you money! Ask you insurance agent for a referral to companies they work with and trust, this can make or break your experience!
Payout for Mitigation and Repair: Upon approving the repair estimate and mitigation costs the insurance company will issue you a check (MINUS YOUR DEDUCTIBLE). Again, BEFORE CASHING THIS CHECK ensure that it is for the right amount. The way it works is YOU are responsible for paying the contractors and restoration company doing the repairs. One thing to remember with construction is that there are usually incurred costs that happen that were not planned for, once you cash the check offered by the insurance company any costs that occur after that will have to be authorized by your adjuster in a “supplement” if you want the insurance company to pay for it.
Unfortunately, there is no discount for replacing your water heater before it bursts but it WILL SAVE YOU MONEY!!! HERES HOW:
When you have a claim due to a burst water heater this is considered a non-catastrophic water claim usually. This means your policy might lose your “claims free” discount if you have it (usually saves you hundreds of dollars each year). On top of losing your claims free discount you will then be “surcharged” for the claim thus raising the price of your policy each year. A claim will stay on your record for the next 5 years and can be seen by ANY other insurance company you are with or looking to switch to.
Important takeaways:
Be proactive not reactive, replace your water heater if it is getting old.
If your water heater does burst, take immediate action.
FIND OUT BEFOREHAND who your insurance agent recommends as a plumber and restoration company, so you know who to call if something happens!!!
Keep your insurance agent involved as they are your advocate!
Look over the estimates very closely before getting them approved by the adjuster.
SAY SOMETHING if you feel there is something wrong during the claims process!!!