Water Heater Damage and Home Insurance
You know that home insurance is important. But are you completely certain that all your home’s systems are covered?
In our previous blog on home insurance, you learned of the various kinds of water damage that are and are not covered under the standard home insurance policy in Ontario. There, we talked about damage caused by burst pipes, leaky plumbing, spring flooding and sewer back-up.
One thing we didn’t cover in that article is another potential source of damage in your home: your hot water heater. Does home insurance cover water heater damage?
Why A Busted Water Heater Could Cost You Big
Although it isn’t mandatory here in Ontario, most banks and lenders will insist that you purchase and show proof of home insurance before they’ll approve you for a mortgage. It’s easy to understand why.
Home insurance can protect you from the costs of a fire, storm, or another unexpected disaster. It also represents peace of mind - the comfort of knowing that your family won’t have to be responsible for a major financial hardship in an already difficult situation.
Without this coverage, many of us would be forced to pay for the significant repair and replacement costs out-of-pocket.
But as you already know, home insurance doesn’t cover every kind of damage and disaster that can occur to your home. And recently, the list of exceptions has expanded to include certain water heaters.
Today, most basic home insurance policies no longer cover damage resulting from a water heater that has been installed for a certain number of years - often 10 years or more.
This means that if your water heater leaks, you could be financially responsible for fixing your basement and replacing your water-damaged belongings yourself.
Why Home Insurance Doesn't Cover Water Heater Damage
How can insurance companies get away with not covering this type of damage? After all, a water heater is something every single home has.
To understand what’s going on here, it helps to explain what insurance companies mean when they talk about ‘insured perils.’
A peril is a chance event that is both unexpected and accidental. Most home insurance plans cover these types of events.
For example, suppose someone comes by and sprays graffiti on your garage door. Since this event wasn’t something you did on purpose, and you couldn’t reasonably predict that it would happen, your home insurance would likely cover the cost of this damage.
Vandalism is generally considered an insured peril. Other commonly insured perils include fire, lightning, theft, wind, hail, falling objects, vehicle impact and smoke from a malfunctioning appliance.
But what about a leaking water heater? Most storage tank water heaters hold 50 gallons, or around 200 litres, of water, which is more than enough to seriously damage your basement floor and any nearby belongings.
As far as most insurance companies are concerned, this is not an insured peril - at least if the unit is over a certain age. Here’s why.
As the name suggests, storage water heater units keep hot water in a tank to be available immediately when you need it. When you turn on the tap, hot water flows out of the tank and cold water flows into the tank to replace it. A thermostat controls the burner or electrical element that maintains the water’s temperature.
Over time, the corrosive minerals in the water can wear away at the tank’s metal components, including the valves and the walls of the tank itself. Storage water heaters do have measures in place to minimize corrosion (the anode rod, for example) but they still require regular maintenance to stay in top shape.
Unfortunately, so many people forget to have their water heater serviced. It is common to see water heaters leak or fail around the 10-12 year mark for exactly this reason.
This has led many insurance companies to view water heater failure after 10 years as an avoidable incident, not an insured peril.
How to Protect Yourself from Water Heater Damage
First thing’s first: if you ever notice your water heater leaking, shut it off right away! You can shut off the water valve near the unit or cut the main water valve in your basement. It’s important to know where to find these valves before it becomes an emergency!
Next, there are a few things you can do right now to avoid unexpected water heater expenses in the future.
- Call your home insurance provider to find out what your policy says. Some policies cover water damage to your home caused by a broken water heater, but not a replacement unit. Others only provide coverage for units installed or manufactured less than 10 years ago. It’s important to know where your policy stands.
- Check the age of your water heater. Most water heaters come with a certification plate that states the year of manufacture. If you have rented your water heater, check with your provider.
- Have your water heater serviced by a professional. This is especially important if your unit is approaching its 10th year. If it’s not in great shape, you should start thinking about a replacement before you find yourself with a soggy basement.
When it comes time to replace your water heater, there are several extra measures you can take to minimize the chance of water damage, including:
- Install a leak detector that will automatically shut off the water intake valve when it detects a leak.
- Install a water heater recovery plate under the new tank to contain any leaks that do occur.
- Have your other basement appliances elevated off the floor to keep them from being damaged by low levels of flooding.
- Drain the water heater storage tank any time you will be away from home for an extended period, especially in the winter. This will prevent the pipes from bursting if they freeze.
- Invest in basement waterproofing.
