Hot Water Havoc: Understanding Insurance When Your Water Heater Fails 

Experts say water damage is one of the costliest types of disasters a homeowner can endure.[1] These types of claims cost billions of dollars annually. 

Your homeowners insurance policy covers water damage that is both sudden and accidental. Sometimes, a hot water heater failure falls into this category. When it does, your insurance company could pay for issues involving your walls, ceilings, and possessions. 

Some types of water problems are not covered by a traditional insurance policy.[2] If the leak begins as a tiny trickle that you don’t notice or fix, your insurance company could stick you with the entire bill. 

Understanding Exclusions & Limitations 

Insurance companies use terms like exclusions and limitations to describe the things they will not cover. Some types of water heater damage will fall into these categories. 

Experts say most water heater failures and floods are due to wear and tear.[3] Water heaters are made of steel separated from the water by a thin glass lining. Eventually, that glass will fail, allowing the water to contact the metal. Corrosion begins, and that process ends with leaks.

A problem like this can start with a leak that’s small and easy to ignore.[4] In time, the crack widens and widens. It can eventually explode and fill your entire home with water. 

Since water heaters are connected to the water line, the leak will continue until the water is shut off at the source.

Insurance companies expect homeowners to perform routine maintenance and make necessary repairs. If you skip this step, including ignoring or not finding a slow leak, your claim could be denied. Insurance companies like Progressive explicitly tell customers they will not pay these claims.[5] 

Types of Water Heater Damage Covered by Insurance 

While the majority of water heater issues start small, some do not. If the leak happens suddenly, the damage could be covered. 

A covered leak typically has at least one of the following attributes:

• The damage is accidental. Your water heater was hit by a falling object, cracked by firemen working on your home, or exploded due to an unknown factor. 
• The appliance was recently inspected. You had a plumber or a contractor visit your home and provide a report that states the device is working properly. 
• No evidence of a slow leak exists. No puddles, mold, or moisture exists around the water heater. 

In a situation like this, the following types of damage might be covered: 

	Covered?	Limits?
Floors	Yes	Per your coverage for the home’s structure
Walls	Yes	Per your coverage for the home’s structure
Possessions	Typically	Per your personal belongings coverage
Water heater	No

Navigating Claims for Water Heater Damage 

As some types of damage from water heaters are covered by homeowners insurance, it’s critical to know how to file a claim. 

Start by reading your homeowners policy carefully. Look for exclusions that could lead to a denied claim. If you think your claim is valid, it’s time to get started. 

Follow these steps to file a claim for water heater damage:[6]

1. Notify your insurance company as soon as possible. 
2. Minimize the damage by turning off the water at the street level. 
3. Document the damage, including providing an inventory, photos, and videos. 
4. Cooperate with the insurance company, including working with an adjuster. 

Expect that your insurance company will look for evidence of neglect or poor maintenance. Gather up proof of your recent water heater inspection, receipts for recent repairs, and any other paperwork that proves you’ve watched over your home properly. 

The claim you file this year could have an impact on next year. For example, one homeowner filed two claims within a short period, and her company opted not to renew her plan.[7] 

If the damage is very small, consider repairing it without filing a claim. You could save money in the long run.

Homeowner Responsibilities 

Your insurance company expects you to observe and maintain your property. Skipping these steps can mean both denied claims and intense damage. The work you do to prevent a problem could come with big benefits later on. Take these responsibilities seriously.

Official Inspections 

Hire a plumber to check your water heater regularly. These experts can check the water for evidence of rust or rot. They can also flush the system completely to ensure that it’s as healthy as it can be. 

Parts Replacement 

Water heaters are built with at least one rod that’s designed to attract corrosive elements and keep the steel lining from deteriorating. These rods should be replaced every five years.[8] Keep those receipts, as it proves that you’ve done the maintenance work your insurance company expects. 

Leak Detection 

You can spot tiny problems before they grow. The following steps may help:

• Watch for major changes in your water bill. 
• Look for leaks near your water heater. 
• Watch for moisture or mold within your home. 

If you think that the appliance is leaking, go to your water meter at the street and take a reading. Don’t use your water for two hours. Read the meter again. If it’s changed, something inside the house is using water. 

Technological Advances

Consider installing a leak meter within your home that communicates with your smartphone. If the water rises, you’ll know immediately and can take action. 

Maintain Your Water Heater 

Your water heater is one of the most critical appliances in your home. It can also be one of the most damaging things you’ll ever own. Treat this investment with respect, and maintain it with care. You could prevent leaks before they begin, and this could save you a lot of money and stress down the road. 

If you must file a claim with your water heater, your maintenance steps will help once again. You’ll have proof that you didn’t neglect your responsibilities and deserve a payout in accordance with your homeowners policy.