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Dealing with Leakage / Seepage Water Damage
June 6, 2018
It has happened to many homeowners over the years – a suddenly appearing damp spot in a floor, wall, or ceiling that turns out to be the product of a long term hidden leak. Hidden water damage (often referred to as “leakage / seepage”) can present many challenges and concerns for homeowners.
The Problem with Leakage / Seepage Claims
Water damage from a hidden cause may or may not be covered depending on your carrier and their specific restrictions on water damage claims. Many carriers switched some years back to writing policies that exclude leakage and seepage damage that has been occurring over a lengthy time period. Of course, for many homeowners, knowing about water leaks the minute they occur is often impossible. Leaky pipes located in walls or under flooring can remain undiscovered for months, causing extensive damage before they are finally revealed.
In addition to these exclusions, many carriers will also place a restrictive cap on covered damage due to leakage / seepage. This could mean the homeowner ends up paying out of pocket for costly repairs to their floors, walls, or ceilings.
Why is Leakage / Seepage Coverage so Restrictive?
Comprehensive coverage for leakage / seepage claims has been harder to get in recent years thanks to contractor AOB fraud. Except for weather events, leakage and seepage are responsible for the most claims against homeowners’ insurance policies each year – and most likely to be taken advantage of by contractors who convince homeowners to sign an Assignment of Benefits (AOB) form.
AOB forms give control of the homeowner’s rights under their policy to the contractor, and the results can be expensive. In fact, claims submitted by a contractor under an AOB form typically end up costing triple the amount of a normal water related claim. Language regarding coverage for hidden water damage has therefore been adopted by many insurance carriers in an effort to curb AOB fraud and limit liability.