Whenever we go through trials and tribulations, sometimes it doesn’t seem like anyone is on our side. Natural disasters come and go, accidents happen, and there are some things we just can’t control. Our homes can get ruined, our bodies can give out, and even accidents cause us to lose our vehicles. These events can be life-changing and devastating to anyone, especially if you’re injured.
Thankfully, there are institutions and companies out there that provide compensation for things like this. Insurance can save lives, even though it can be expensive sometimes. It’s better to have than not have, though. House damage is hard to deal with. However, if you have insurance, it can make things a lot easier to deal with. There are many different policies and guidelines for most of them, though. There are plenty of agents who can help you through it.
What is insurance?
In its most basic form, insurance is a way to protect you from financial loss. It is a type of risk management. This is regardless of the situation, but there are specific types of insurances as well. If you purchase insurance, you are a policyholder or insured. Each insurance provider, be it a company or underwriter, gives you a contract called an insurance policy.
Insurance has been in existence since the BC era. The Chinese and Babylonian traders practiced a system that they would pay the lender an additional amount in exchange for the lender’s guarantee to cancel if stolen or lost. Contracts didn’t come into play until the 1300’s with Genoa. Fast forward to the 1600’s and we have property insurance that came from the Great Fire of London to life insurance policies in the 1800’s in London.
There are a few things to keep in mind when looking for insurance. Some companies offer multiple types, combining discounts for bundled ones. If there is something that is being financed, a bank or loan provider may require you to get full coverage. This means that your insurance could be a lot more than you expect, considering full coverage takes care of everything.
Types of Insurance
There are many types of insurance in the world. Some companies supply most of them in a bundle, as said above. There are deals you can partake in to lower the overall cost of your policies. Each policy is different and may cover different things, so be sure to read your policy thoroughly. People can get personal insurance for possessions and homes and businesses can get it for their assets.
This insurance type protects the insured against an incident of a vehicle. This means that any damage to you, your car, or others will be covered with this insurance. This falls under property, liability, and medical coverage. Depending on the type of coverage, this can get pretty expensive, but it is required in America for the most part. Each state’s laws are different, however.
This type of insurance is more of an “all around” one. This can also be applied to other insurances, such as auto, liability, and some workers compensation. This protects policyholders from things like crime, terrorism, kidnap and ransom, and political risk. It’s a very broad sense, but there are some companies that offer this.
Credit and Payment Protection
Mortgage payments would be put under this category. It’s a type of credit insurance that is used to refer to policies that cover debt. Credit card companies offer these payment protection plans, which are forms of this type of insurance. Other things like trade credit and collateral protection fall under here too. This means that policy pays the insured for covered accounts receivable if the debtor defaults or if the property held as collateral for loans.
Guaranteed Auto Protection (GAP)
This covers the excess amount on your auto loan if you are financing a vehicle. Sometimes, an insurance company doesn’t cover the entirety of the loan you’re getting. It is usually offered to consumers who make low down payments, have high interest rates, and people who have 60+ month terms. The laws on this category will differ from country and state.
This is a pretty popular one, considering this covers the cost of medical treatment. It is a hot topic in today’s society. Dental insurance isn’t always covered with health insurance, but can usually be added to a health policy. In most countries that are thoroughly developed, its government supplies all citizens with health coverage from taxes.
Income Protection and Disability
Disability insurance provides the insured if they become unable to work. This can be because of illness or insurance. There are short-term and long-term versions of these policies. Short-term policies usually go up to around six months, where long-term usually goes until policyholders are permanently disabled. However, insurers usually urge people to go back to work.
There are a few other versions of this protection insurance. These are disability overhead, total permanent disability, and workers’ compensation. These usually revolve around a profession. Disability overhead is for business owners to cover the overhead expenses if unable to work. Total permanent disability is when someone can’t work in their profession. Workers’ compensation is when a part of a worker’s wages are lost due to job-related injury.
This is a bit broader than the other insurances, but it protects legal claims against the policyholder. This is usually included in homeowner’s and automobile insurances, protecting them from claims of harm or damage. However, it can be applied to public liability, directors and officers, environmental, and more. There are many layers to this insurance, so reading over the policies are recommended.
This type of insurance provides some sort of financial benefit to a beneficiary or decedent’s family member. Income may be provided to the passing insured’s family for funeral, burial, and other expenses. They can be obtained through a lump sum or annuity, which is provided by the insurance companies. In the United States and United Kingdom, there are laws that the cash value cannot be taxed.
This is where you’ll find the water damage insurance, for the most part. Water damage falls under property insurance, but it also covers fire, theft, or weather. There are specialized types of property insurance, including flood, earthquake, and home insurance. There are a few others like aviation, boiler, builder’s risk, crop, fidelity bond, landlord, marine, and others.
There are some different types of insurances when it comes to other things. There are so many events and perils that a person can come into contact with. For example, there are bloodstock insurances, which cover horses. There’s legal expenses, pet, livestock, nuclear, travel, and even divorce insurance. Dangers are all around, but thankfully, there are some people out there who can help us.
Does Homeowners’ Insurance Cover Water Damage?
There are many companies out there that protect your homes from water damage. Usually, these are categorized under property insurance. More specifically, this is home or homeowner’s insurance. It covers private residence and combines various personal insurance protections. It can cover the home itself, contents, loss of possessions, and liability for accidents.
Home insurance varies by area, considering some homes are in more dangerous places than others. For example, houses along the south are sometimes required to have certain types of insurance. Considering there is a lot of flooding in Louisiana and Mississippi, home financers may require the homeowner to purchase flood or water damage insurance.
There are many stipulations guidelines to follow when it comes to home insurance. Most policies range from basic, minimal structural coverage to broad, special, and even renter properties. Usually, renting a domicile is a different insurance called “renters” or “landlord” insurance. There are a few companies that offer this despite most things being under the landlord’s control regardless.
Homeowners’ Insurance Coverage
Many insurance companies provide homeowners’ policies for those who want to be insured. While it depends entirely on the company, there are a few things that many of them have in common. Each company should have an agent you can talk to, so be sure to ask any questions. Most of them have things you can add for additional fees. The common things are:
- Personal Property
- Other structures on your property
Dwelling coverage is usually broad and wide. This goes for any weather damage from lightning strikes, wind, hail, and fire. Be sure to ask if flood coverage is involved, considering some insurance companies have separate policies. This coverage may help repair or even replace your home, so it’s a good idea to look into it.
Personal property is for personal belongings and possessions. This policy may help replace or reimburse you for furniture, clothing, electronics, antiques, etc. Whenever your home suffers some damage and your items are contaminated or destroyed, you will want to document and make a list of everything so you can be reimbursed.
Liability is included so that medical bills or lost wages for someone else are covered. It also includes legal expenses if sued and costs of repairing the damage you may have accidentally caused to someone else. Accidents can happen, and this sort of coverage is there for that. This is more for another person rather than yourself.
Other structures include things like sheds or fences on the outside of your home. Garages are also included, though it may already be under your homeowner’s insurance if it is attached. Your policy will usually reimburse you the value of these things.
This type of policy gives the same benefits of a homeowner’s insurance to a tenant of a rented home. However, it does not include the actual domicile itself. That means any structural dwelling, except for small alterations, aren’t covered by this. It gives the insured liability and personal property coverage against theft, fire, and vandalism. Water damage usually falls under the landlord’s responsibilities, who will likely already have insurance on the home.
However, if it is the tenant’s fault, that’s where renters’ insurance comes in handy. Accidents happen, whether it’s an overflowing bathtub or sink, a washing machine, or anything like that. Things can happen, so being a policyholder as a renter is a great idea. It will also cover any lost possessions, as said above, which helps during a lot of situations.
Types of Water Damage Not Covered by Home Insurance
Unfortunately, it’s a normal case that an insurance company will try to get out of paying for things. That’s just how business runs, after all. There are certain things that insurance companies won’t cover, which is usually described in your policy. That’s why it’s a good idea to read your policy and make sure that it covers the things that you want it to cover.
The things that insurance companies may not cover are:
- Long-standing maintenance problems. If there is water damage that has not been reported or claimed for months, then it is unlikely they will cover it. This is because mold is likely in the area, which increases the amount of repairs needed.
- Water damage sources. This means anything that may be causing the leak like a dishwasher, faucet, or pipe. Homeowners’ insurance will likely not cover any appliances, but it will repair things like walls or floors. You are responsible for the plumbing and appliances in this case, but these different systems may have insurances you can get.
- Flooding is not usually covered by homeowners’ insurance. This is a separate type of insurance called flood insurance coverage. Some companies can add this clause to the homeowners’ insurance, but it is usually additional and must be asked for.
Difference Between Flood Damage and Water Damage
The average homeowners’ policies do not cover flood damage when it comes to water damage. Flood and floodwater is defined as an overflowing of large amount of water beyond normal confines. Insurance companies usually describe it as having two acres or two properties or more of water coverage. This can be from inland or tidal water, meaning rivers, lakes, or storm surge of the ocean.
Many insurance companies have been able to get away with this for some time, so it’s always a good idea to verify it with your insurer. Some southern homes and homes close to water are required to get flood insurance. It’s likely that the area floods pretty easily, so it can be a cause for worry. Flood insurance is always a good idea, though.
How Much Does Water Damage Cost to Repair?
At times, there are times when we might not have insurance on our homes when it comes to water damage. A homeowner’s policy may cover a wide variety of things, but you have to ensure it covers water damage as well. If you’re caught without it, it could lead to a very expensive bill. This is especially true if you’ve let it sit. Mold will grow, which will only add to the bill for a professional to come and take care of it.
The average cost of water damage repair and cleanup is on a national average of around $2,500, according to HomeAdvisor. Of course, this figure is an average and it depends entirely on how much damage there is. It also depends on the area of the home that is damaged, considering that different areas or materials may cost more or less. It also depends on the type of water the damage came from, from sanitary to contaminated, category 3 water.
Ceiling and Roof
The average repair amount for any sort of ceiling or roof is around the $800 mark. This can be a dangerous task, so repairing a ceiling should be left to professionals. If you do it improperly, it can do to a lot more problems. This includes further water damage, mold and mildew, and possibly causing the water damage to spread to walls and the floor.
Basement and Flooding
The basement is a prime area for water damage and mold growth. It is a dark, warm area that can be quite moist a lot of the time. Most people put their washing machine in here, causing more moisture to emit into the air. Humidity and flooding can destroy the walls of a basement and house mold much easier than other areas of the home.
Basements are very prone to water damage, considering drainage pipes and other fixtures can back up. The price of fixing up a basement after water damage can be from $1,000 to $1,500, but drainage repairs can cost over $10,000 at times. It’s a good idea to check up on these drains often with your monthly routine maintenance. Looking for water damage in a house is pretty easy.
Broken Pipes and Plumbing
Winter can be terrible for homes, considering water freezes so easily, especially up north. It is even colder in the south, so bursting pipes are dangerous. If something happens to your pipes, whether bursting or leaking, it can cost anywhere from $500 to $2,000. Preparing your pipes during the winter is a good idea, meaning to wrap or cover them. You can also have your water running in a gentle stream to keep it flowing and not stop to freeze.
Drywall and Plaster
These materials are common worldwide, making it relatively easy to replace and repair drywall and plaster. This doesn’t have to be done by professionals if you’re good with a saw and measurement. Remember to keep your safety in mind, though. Repairing drywall usually runs around $200-800 depending on the amount of damage, but mold growth can be a more damaging factor. Leaving water damage will cause mold to grow and raise the price into the thousands.
Depending on the type of floor and the extent of the water damage, floor damage is usually determined to be between $250-500. Granted, it can be a bit more if it's wood or carpeting. There are many types of wood or carpet. Carpeting also has a secondary layer that must be removed for water repair. The subfloor is important and can house mold and mildew as well.
The bathroom is where many of us can settle to relax, but it can also be one of the more expensive areas. The bathtub, toilet, sink, and any drainage are all part of a water system and can also have leaks or bursts. Replacing a bathtub can be a lot of work, especially since you will likely have to replace the drywall and other things around it. It can cost up to $3,000 or more.
How much coverage do you need?
Whenever getting a policy with a company, they will recommend certain things when you provide them with information. Whenever it comes to a home policy, agents will likely send out an inspector to gauge how much your property costs. After you are given an estimate, the next step is to get the coverage amount that best fits what you need. State Farm and other companies recommend that you get at least 100% of your home’s estimated replacement cost.
Keep in mind that market value is not the same as replacement cost. When it comes to market value, a buyer would pay for the land and home. The replacement cost is anything that is needed to replace or rebuild the entire house. It is not the same as the home’s purchase price or land cost, nor is it any outstanding amount of any mortgage loan.
If you have any upgrades to your home, like bathrooms or kitchens, finished basements, and more, it can affect the estimated amount. Whenever you do get an upgrade, you may want to call to schedule another inspection done by any contractor or appraiser. This can be included in your insurance, so the policy may need to be adjusted.
The Best Insurance Company
This is a hard question to answer, considering there are many things it depends on. Some insurance companies are rated higher than others, of course, but you should consider your options. Of course, this is entirely subjective. What you should be looking for is one that is cheap for you and contains everything you need. Many people use “shopping for insurance” to describe the experience, but that’s what you have to do.
Your situation will be different from someone else’s. As such, an agent will work with you to get the best option and usually get the best price that they can for you. This may include offering you bundles and other things to work with so you can get bigger and bigger discounts. There is a lot of bloat in this area, though. Be sure to go over any policy that they’re trying to sell you on. Insurance can be really expensive, after all.
The top U.S. property casualty companies in 2013 by net premiums written, according to Investopedia, are:
- State Farm Group
- Allstate Insurance Group
- Liberty Mutual
- Berkshire Hathaway (including GEICO)
- Travelers Group
You may have seen a few commercials from each of these insurance companies. Each of them provides a homeowners’ insurance policy that you can partake in, so let’s dive in to see what each of them has to offer. Keep in mind that these prices and statements have been researched at the time of writing this. There are many changes that are done overtime, so refer to their websites or an agent to double-check.
State Farm has been one of the biggest mutual insurance companies in the US for nearly a century. Founded in 1922, they strive to give what they can to their customers. They have multiple types of insurances and companies that are under them. They are competitive, so they will try to match or better the rates of the other companies you might go for. The insurances they cover are:
- Homeowners’ and Renters’
- Identity Restoration
Since we’re all about the homeowners’ insurance here, there are a few things that you need to know about State Farm’s insurance coverage. There are multiple things that State Farm’s homeowners’ policies cover and some things that they don’t. It may cover:
- Weather: Storms, fire, wind, hail, lightning, freezing of a plumbing system, weight of ice, snow or sleet
- Non-weather: Theft, vandalism, riots, aircraft and vehicles
- Accidental Direct Physical Loss: Water from plumbing, tearing/bulging of heating or cooling systems, artificially generated electrical current
Of course, be sure to refer to the actual policy, considering there may be stipulations and other asterisks not listed in these lists. State Farm’s homeowner policies may not cover:
- If the insured intentionally causes harm to property or person
- Business pursuits or professional services
- Onwership, operation, or maintenance of aircraft, motor vehicles, and some watercraft.
All of these things are listed in your policy, so be sure to read through it when you get it. Talking to an agent can help ease a lot of worries if you have any, so be sure to give them a call if you want to start some homeowners’ policies.
Allstate has produced a lot of happy customers over the years. It is very competitive and can match most competitors regarding policies. Having been established a few years after State Farm in 1931, they provide a lot of different insurances as well:
- Renters’ and Landlords’
- Boat and other vehicles
- Voluntary Employee
- Umbrella (which is to catch any overflowing fees or things like deductibles)
Allstate’s homeowners’ insurance comes with quite a few benefits. Aside from the company extras like points, discounts, and other things, it provides specific standards with policies. As for homeowner's insurance, it includes:
- Dwelling to help protect the physical structure like walls and roof.
- Other structures separate from your home, like a shed or detached garage.
- Personal property like furniture, stereos, and other electronics.
- Liability protection in case someone claims you're responsible.
- Guest medical protection covers anyone who may be injured on your property.
- Living expenses, which may include things like hotel stays.
There are a lot more when it comes to these policies, as well as optional coverage. Allstate has agents to help you, so you can find an agent and get a policy anytime. Remember that Allstate does not include flood coverage for homeowners’ insurance, so you will have to get a separate policy for floods if you want that covered.
Around the third largest insurance company in 2013, Liberty Mutual has made its mark among the establishments. One of the older companies, Liberty Mutual, was established in 1912 and has operated for over a century. They promise fast, easy quotes and convenience for everyone who wants to get a policy from them.
Their insurances include:
- Identity Restoration
Their homeowners’ insurance comprises a few simple questions and comes with an accurate, no-gimmick quote. They cover small incidents and major problems, defending against unexpected things plaguing your mind. The things that are included in the homeowners’ policies are:
- Dwelling, which is the home or other structures on your property.
- Personal possessions like clothing, appliances, or antiques.
- Liability, which protects you from other’s claims against you.
- Valuables like jewelry, art, or higher-priced electronics.
- Inflation protection, which adjusts your coverage limits at your policy’s renewal.
- Home Protector Plus, which can pay for unforeseen costs when replacing or rebuilding.
Their homeowners’ insurance does not cover floods. They offer a separate flood insurance policy, however. Federal disaster assistance is only available if the President declares a disaster, so getting aid for flood damage can be difficult. Calling one of their agents will give you information on what to do and how to get the insurance.
Likely the oldest insurance companies of the five, this company has been in the industry since 1839. That was almost 200 years ago, so you can be certain that they know what they’re doing. You might know this company in the form of GEICO. The little lizard is owned by Berkshire Hathaway, as well as Dairy Queen, Fruit of the Loom, and even Kraft Heinz. It’s a gigantic company.
Berkshire policies range from personal to business. There are many different policies that you can get from them, but personal insurance includes:
- High Value Homes
Like the others, this company provides homeowners’ insurance that covers a wide variety of things when it comes to your domicile. The highlights of this policy are:
- Dwelling and other structures, which will cover the replacement cost of your home and non-connected buildings.
- Personal property, which provides a separate amount to cover belongings despite being a deductible. Be sure to keep an inventory on hand.
- Personal liability, which is in the case of an injury or claim from someone else.
- Loss of use of home, which is another way of saying living expenses. Anytime you can’t stay in your home because of displacement, they will cover the cost of the rented area, whether hotel or apartment.
Once again, flood insurance isn't covered even though they’ve been in the business for quite some time. It’s a separate policy like all the others, so be sure to call an agent or a representative to find out if you need it or not. Some homes aren’t in a flood zone, so you might not need it.
Almost as old as the previous company, Travelers Companies is a public insurance company that offers a variety of insurances. While they do include personal insurance, they also provide business, bond and specialty insurance as well. This includes surety, crime, and financial liability businesses which primarily uses credit-based underwriting processes.
For a more personal policy, the Travelers Companies include:
- Boat and Yacht
- Wedding and Events
- Affinity Car and Home Program
This policy covers the usual when it comes to homeowners’ insurance. These are:
- Dwelling and other structure coverage
- Personal property coverage
- Loss of Use coverage
- Personal Liability coverage
These should be pretty common if you’ve gotten this far, including all of the things that the others do. However, they may offer you a better price than the others, so you have to shop around for a policy that fits your needs. Keep in mind that this policy does not include flood insurance, like the others. You must get a separate policy when it comes to flooding.
All of these insurance companies have many things in common, but they may offer a better price than the other. Shopping for insurance can be a grueling task, but one of them may have a better discount or something that you can’t find at the other company. Make sure to call around before you make any solid decision, as it can save you a lot of money in the long run.
Insurance can be complicated and annoying to learn about and shop for. There are so many different offers and discounts that it can be a hassle, especially since you have to read and go over each policy that you want to get. There are many insurance companies out there, both in the United States and worldwide. Thankfully, there are agents and other people that can help us choose.
Homeowners’ insurance covers most water damage from category one and others but will not cover flood damage. Flood insurance comes from a completely different policy, since it’s not covered under a homeowners’ policy. Renters’ insurance also helps with things like water damage, so if you have an apartment or rented home, it’ll help a lot.
Either way, insurance is a great thing to have. There is usually an insurance policy for anything, so all you have to do is look around. This includes personal, business, and even bonds. If you are interested in multiple insurances, ensure the company you’re looking into has most of them, considering they can bundle it. Keep shopping if you can’t find the one perfect for you. Companies are competitive, so get prices and see if you can get the lowest rates.