Home insurance and water damage

It's not often you can start off an article about insurance with a quote from The Rime of the Ancient Mariner by Coleridge but, when the chance comes, you grab it. So here goes, "Water, water, everywhere, Nor any drop to drink." Now we all feel better for a little culture, let's get on with the serious stuff. The folk whose thankless task it is to sell the insurance industry and its products do routine surveys to find out just how bad the insurers' image problem is. This year, yet another set of figures shows the industry's rep at another all-time low with particular popularity problems for the policies supposedly offering coverage against damage to the home. Now why should that be?

Well, during a recession when family budgets are really under pressure, there's a change of attitude. In the days of boom, most people would have simply pulled out a credit card and paid for damaged contents to be replaced or repairs to be done. Unless it was a major loss, it was quicker and easier just to pay. With the days of bust showing no signs of going any time soon, families now find it better to claim every time there's damage. If they are paying the insurance premium, they want value for their money. Not surprisingly, this threatens the insurers' profit so they reject claims, go slow on negotiating a payment or just pay a token amount. This often proves a wake-up call to households we had not realized just how hard it is to separate insurers from their cash.

A part of the problem is that many home owners never read their policies and so do not know exactly what's covered. Go back fifty years and you were likely to see coverage for flooding. Now climate change is here (don't listen to the GOP on this), the incidence of flooding is rising fast (just like the water levels) and so insurers have stopped offering it. There is a federal program run by FEMA offering some subsidized cover but, when the water comes in biblical amounts, the best you can do is move to higher ground.

The magic phrase to look for in your policy is "water damage". Before you sign up for a policy or renew, you should always ask what it includes. Is it going to replace the ceiling when the roof is damaged and rain enters, or replace furniture when the pipes freeze and crack during the winter? What happens if a nearby sewer is blocked by leaves during the Fall and your basement suddenly collects a pool and stench to match. All this before we get to mudslides and your local river overflowing its banks. There are a hundred-and-one ways in which water can damage your home. So get out that home insurance policy and read it through. More importantly, before you act on any home insurance quotes, talk through the extent of the home insurance coverage before signing up. What may look good value at first sight may prove very bad value when your claim for water damage is denied.