Insurance – The Good, the Bad, the Ugly

Knowledge is power.

The more you know, the better - a broad statement to make but applies to almost everything. understanding your home owners
insurance policy is
certainly no exception.

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It is no secret that we promote insurance and plumbing stats in our advertising. One major stat showing that even after your claim has been filed and deductible paid, you may still end up paying anywhere from $5,000 to $15,000+ in out of pocket expenses – depending on the amount of damage. At first glance, it may seem weird that you have to pay so much beyond a deductible. After-all, isn’t that the point of paying for insurance in the first place?

Below is just one Facebook post, but shows how the vast majority of homeowners think about insurance and deductibles. And for the record, we tend to agree. Unless, of course, you become one of the 14,000 water damage claims that happen per day in the U.S. and suddenly find yourself tapping into savings to fix your home.

 
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According to Esurance, a mere crack of just a few millimeters can lead to an ocean-sized leak in your home to the tune of 250 gallons of water a day. In fact, water damage due to burst pipes and other perils is the second-most filed insurance claim in the U.S. — with the average residential claim amounting to a whopping $10,000. If a burst pipe suddenly and unexpectedly wreaks havoc on your house, your homeowners insurance could help cover plumbing repair and replacement bills up to the limits you choose for your policy. (Cue giant sigh of relief.)

While most policies kick in to help repair damage to the structure of your abode, your personal property coverage on your policy can help pay to repair or replace your beloved belongings (like furniture, clothes, electronics and more) after they're damaged or destroyed as a result of a burst pipe.

This all sounds great. Here’s the catch.

If a pipe bursts or leaks due to neglect or lack of maintenance on your part – like failing to leave your heating on while you are away on vacation, causing it to freeze and crack – or through normal wear-and-tear, you could be responsible for paying the bills. This is why filing a claim within the first 24 hours is crucial as it gets harder to prove liability even if you are covered for water damage in your policy.

This “gray area” is consistently accurate for almost every provider who offers water damage coverage with their policies. Equally consistent is the amount of homeowners who do not practice normal and consistent maintenance on their plumbing and water using appliances. It is because of these reasons we keep reading and hearing about how insurance companies did not fully cover all of the expenses associated with water damage claims.

We know all experiences differ and some providers do cover all expenses and have extremely long claim processing windows. But, if you are not happy with your provider, we strongly encourage to shop around. Our experience tells us that consistency with coverage may vary, not only by company, but by state and region within those companies.

Automatic Water Shutoff Sensors

Fortunately, smart home innovators are on top of their game and many smart water sensors on the market actually shut off water if a leak is detected. The result? You can avoid stress, hassle and costly damage. Nice!

Thinking Smart Saves You Money

Certain smart water sensors may qualify you to receive a smart home discount on your American Family homeowners insurance policy, so be sure to check with your agent to find out how you can save.

Find out more about the benefits of smart home technology and gain peace of mind about your future protection. Your American Family agent is a great resource to help you discover more about how smart home water sensors and other smart home tech can provide a safer, happier home.

Another solution – prevent the claim altogether!

 
Guardian GVD3 Kit – Everything you need to protect your home from water damage.

Guardian GVD3 Kit – Everything you need to protect your home from water damage.

 

Guardian monitors your home to prevent the costly effects of water damage. A fully autonomous and easy-to-install Valve Controller connects directly to your existing water main and communicates with leak detectors throughout your home. These work together to take action, shutting off your water at the first sign of a leak or flood to limit the potentially devastating impact on your home and wallet. And for added accessibility, the system can be monitored and controlled via the Guardian app. Guardian requires no tools, no plumber and no pipe cutting; simply Install, Connect, and Protect. No leak means no damage … and, you guessed it, no insurance claim.


Some additional, eye-opening stats that homeowners should be aware of when it comes to water damage.

Plumbing supply system failures are the leading source of residential water losses, with 48% greater losses (in terms of total payouts) than the second leading source. (Insurance Institute for Business & Home Safety)

  • Plumbing supply system failures cost an average of $5,092 per incident after the deductible was paid.

  • Of the claims analyzed, 65% were caused by a failure of the plumbing supply system material, while 18% were caused by frozen pipes.

  • Frozen pipe-related failures resulted in losses that were roughly twice as severe as those caused by plumbing supply system material failures.

  • The risk of a frozen pipe failure is dependent upon the geographic location of the home, the location of the pipe within the structure and the time of year.

  • Homes located in North Region states with plumbing in the basement and/or exterior walls have the greatest risk of a frozen pipe failure.

  • Plumbing supply lines to the exterior hose bib are the areas most vulnerable to bursting during freezing weather. In this sample, January was the month when pipes were most prone to freezing.

  • In this sample, homes that were 16 to 40 years of age represented a larger proportion of supply system material failure claims than their proportion of total policies.

  • The proportion of total water loss claims attributed to supply system material failure was twice as high in the South Region than in the North Region.

  • Of the claims analyzed, 22% of all supply system material failures occurred beneath the slab of homes without basements.