Understanding the Damage Brought on by Water Leaks

Many home losses experienced by business owners involve water damage brought on by leaky pipes. Water can be very destructive whether it seeps out of a loose fitting or gushes from a ruptured main. Fortunately, many types of water leaks are covered by a commercial property coverage.

What is Covered
Most commercial real estate policies cover damage to insured property caused by any danger that isn't specifically excluded. While land policies contain a broad water exception, the exception applies mainly to flooding and related perils such as surface water, waves, mudflow, along with the overflow of a body of water. It makes no reference of leaky pipes.

1. Water Damage From Unexpected Occasions
Property damage caused by water leaking from a broken pipe or appliance (such as a water heater) is generally covered under a property policy in the event the damage happens suddenly. By way of example, suppose that a supply line into a water fountain in your workplace suddenly ruptures. Leaking water damages the ground close to the water fountain. Assuming your property policy includes building policy, it should cover the cost to replace the damaged flooring.

Property policies also cover abrupt water leaks from fire protective systems. For instance, an employee of yours is positioning a ladder on your workplace to change a light bulb if he hits a sprinkler head. Water pours from their damaged head, damaging office furniture. Your property policy must cover the damage to the furniture.

Note that property policies normally don't cover damage caused by water that backs up from a sewer, drain or sump pump. To make sure such damage, you can buy sewer backup coverage via a separate endorsement.

2. The Charge to Tear out and Repair Damaged Building
Lots of water pipes are located inside ceilings, walls, floors, or other places that are not easy to access. As soon as an inner pipe is leaking, you might need to tear out a portion of the building to repair the pipe.

Luckily, most home policies cover the cost of ripping out and replacing any section of the construction you eliminate to repair damage to the plumbing system or an appliance (like a boiler) where water or another substance has escaped.

In the water fountain scenario described above, assume that the distribution line is situated inside a wall. To gain access to the damaged pipe, then you need to remove a portion of the wall. Your policy should pay the cost to tear out and replace that portion of the wall.

3. Damage to Fire Protective Systems
Property policies generally exclude the cost to repair any defect to an appliance or system by which water or other material flows. However, they do cover the expense to repair or replace damaged parts of a flame protective system when the damage causes a discharge of water, powder, foam, gas, or another material used to suppress fires. Policies also cover the cost of repairing or replacing parts of the system that are damaged by freezing.

For instance, suppose that you own a warehouse that is protected by a sprinkler system. A sprinkler head becomes corroded and discharges water in your warehouse. The water causes damage to property stored in your warehouse. Your property coverage should cover both the damage to your personal property and the expense to repair or replace the damaged irrigation head.

What's Excluded
There are some varieties of water leaks that are typically excluded by commercial property coverages. Included in these are slow leaks and certain leaks caused by freezing.

1. Slow Leaks
A normal property policy excludes damage caused by water which leaks or seeps continuously for 14 days or more. This exception applies not only to pipe leaks but in addition to water in the form of humidity, moisture or vapor. It is intended to eliminate coverage for water damage which results from poor maintenance rather than a sudden accidental occasion.

For instance, assume a clogged drain line in an ac unit causes water to accumulate on the floor of your building. The leak is slow, so no one notices the water for several months. By the time the problem is found, the flooring under the air conditioner has suffered water damage. Because the leak lasted for over 14 days, your insurer refuses to pay the damage to the ground.

2. Leaks Brought on by Freezing
A common cold weather threat faced by business owners is a frozen water heater. If a pipe freezes, water can slow to a trickle or not flow in any way. The pressure inside the pipe from expanding ice may eventually make the pipe to burst.

Many property policies contain a"freezing" exception similar to that found in the ISOreal estate policy. The exclusion damage brought on by water, other liquids, powder or molten material that leaks or flows out of pipes, heating, ac or other equipment caused by freezing. This exclusion contains three exceptions. It Doesn't apply:​

To fire resistant methods : For example, you own a commercial building that contains a wet sprinkler system (meaning that the pipes are full of water). A severe cold spell strikes your area and many pipes in the ceiling freeze--one of those plumbing pops, resulting in water damage your office furniture, computers, and other private property.
If you do your best to keep heat in the building: For instance, you have a warehouse that's heated during the winter months. A power outage causes the furnace to shut off, and also a plumbing pipe freezes--the pipe bursts, causing water damage to your equipment and stock.
In case you don't keep heat in the construction, but you do drain the gear and shut off the water or other liquid distribution : For example, you have an unheated building that you use for storage. Before winter arrived, you emptied the water heater and supply lines. Unfortunately, some water stayed in the hot water due to an unnoticed clog. The pipe froze and subsequently burst. Leaking water caused damage to land you stored in the warehouse.
Mold Damage
Pipe leaks can lead to mold. Many property policies exclude damage brought on by mold(typically called alopecia ) but add back a limited amount of coverage.