Does Renters Insurance Cover Water Damage?
When you rent an apartment, it is important to stay protected. Unlike homeowners insurance, there is only a need to cover your inside walls, because the apartment complex should have a separate policy in place to cover the rest. Your renters insurance policy will protect your items, or “personal property.” If you have things that are valuable, such as clothing, electronics, jewelry, and other items, it is worth obtaining a comprehensive insurance policy to make sure that you are covered. Plenty of things can happen in your apartment. From fires to floods, how can you tell if your insurance will cover you?
Is Water Damage Covered?
Because an apartment complex normally consists of units that have shared walls, a lot can happen to your unit unintentionally. Pipes that connect in different apartments have the ability to burst at any given moment. If your neighbor causes a clog in his portion of the pipe, this can lead to a damaging effect in your apartment unit. This also works the other way around. Anything that happens to your piping has the risk of transferring over into your neighbor’s unit. How will you know who is responsible for covering the claim? Is it you, your neighbor, or your landlord?
Effective Coverage explains that the standard renters insurance policy does not cover water damage claims. This comes as a surprise to most who have insurance, as it is expected that insurance will cover you no matter what. The main perils that renters insurance protect you from are fire, smoke, and explosion. The exclusion for water damage is often mentioned in great detail, but if your agent does not explain this to you, then you will likely be surprised to discover this.
The same type of coverage is usually excluded if the water damage comes from a backup of the sewage tank. While this is out of your control, and even out of the building, it can impact you severely if it happens. The way that insurance carriers see it is that, because the risk is not in your control, they cannot promise to protect you from it. This type of exclusion goes unnoticed until it is too late. Ensure that you fully understand what your renter’s insurance policy covers before going forward with it.
What Is an Endorsement?
Your insurance policy is made up of a typical standard form, as mentioned. If you wanted to add any additional coverage to the policy, you are able to do this. Because the coverage is not mandatory, it is important to understand that you will have to pay extra and request to add the coverage on. For example, water damage/water backup is one of these coverages. The Balance explains that an endorsement is like an addition to your policy.
Upon your request, you can ask your agent for an endorsement on the policy to cover water damage claims. Your agent can only process a change like this if you request it, so don’t be shy to start the conversation. Because the coverage is not mandatory, you will likely not find it on your policy without asking for it first. If you already have a policy in place, and three months later you decide to add an endorsement, it becomes effective from the date you add it until the end of your original policy period. You can add endorsements at any time given that you give your agent the proper notice.
How Do You Know Who is Liable?
Policy Genius explains that, even with the water backup coverage on your policy, it is not a guarantee that you will be the one who has to file a claim. Renters insurance doesn’t only cover your belongings, but it also covers you against claims that you are liable for (meaning claims that result because you are at fault). For example, if you leave your bathtub running all day long, causing damage to your neighbor’s ceiling, this would fall under your liability. If the same thing were to happen to you, then it would be your neighbor’s fault.
In cases that are outside of any single individual’s control, such as sewer backup or broken pipes, this is when an endorsement will come in handy. Endorsing, or adding, the coverage onto your policy for an additional charge will give you the extra protection necessary. Otherwise, you might be left with a leak that your landlord, or anyone else, will refuse to cover. Flooding due to rain can lead to a different type of policy altogether. If you live in an area prone to flooding by natural causes, you will need to look into flood insurance. This is never available by endorsement on a renter’s insurance policy.
Because of all the different exclusions and loopholes, your best move is to have a conversation with your agent. Ensure that you understand what you are paying for, and ask questions if you do not. If it is possible to add an endorsement covering water backup, it is recommended to add this. Even if you feel like it won’t happen to you, it is better to have the coverage than wishing you had it when you need to pay a claim out of pocket.