What’s the difference between a sewer backup and a plumbing system overflow?
A great deal of rain can overtax the sewer systems. This can cause water to flow backward through a property owner’s lateral pipes, through the drain, and into the basement. When water outside the insured’s plumbing system flows backward through the plumbing into the property, this is a backup claim.
A backup is different from an overflow. An overflow occurs when there’s a blockage in the plumbing system. When the toilet is flushed, there’s nowhere for the water to go due to the blockage, so the toilet bowl overflows. The water that’s causing damage never enters the sewer system. An overflow can also occur when there’s blockage within the lateral pipe. The water from the property flows down the lateral and because of the blockage, the water has nowhere to go so it overflows the floor drain or a lower-level bathroom causing damage.
So how are these two claims covered? It depends on the policy because there’s a difference between personal lines and commercial lines.
Let’s start with the homeowner’s policy. The homeowner’s policy (HO0003Z) affords coverage for an overflow of the plumbing system up to the policy limit; however, damage from water that backs up through sewers or drains, or overflows or discharges from a sump, sump pump, or related equipment is specifically excluded.
On the commercial side, the main coverage policy sold with SMARTbusiness™ is the businessowners (BP0003). The businessowners policy provides coverage for water that accidentally overflows from a plumbing fixture; however, damage from water that backs up or overflows from a sewer, drain, or sump is excluded. Unlike the HO0003Z policy, there would be no coverage for damage resulting from water that overflows a drain due to a clog in a lateral pipe.
How do you get coverage for a sewer backup or sump overflow on the homeowner’s policy? With the Water Backup and Sump Overflow Coverage endorsement (HO0495Z). The endorsement provides coverage for water backup or sump overflow for both personal property and structural damage from water. Coverage is limited to the amount endorsed under the form, and the deductible is 10% of the coverage limit, not to exceed $1,000.
The SMARTBusiness (BP0003) businessowners coverage form can be endorsed with the Water Back-up and Sump Overflow endorsement (BP0453z) to provide coverage for resulting water that backs up or overflows from a sewer, drain, or sump. Coverage is provided for the property insured under the main businessowners coverage form, applies to all locations, and is limited to the amount of coverage listed on the endorsement. The limit on the endorsement is the most that would be paid out in one policy term. This is different from the personal lines endorsement.
They say knowledge is power. Let this information drive you to provide Silver Lining® Service. You’re empowered with the knowledge to inform your customers of the protection they might need when the rains begin to fall … and fall ... and fall.
This blog post was written by Theresa Bednar, Claims Quality Analyst for West Bend.
