An insured's water service line for his house leaked for about a month while he was out of town. Does an HO-3 policy cover the cost of the water bill?
An insured’s water service line for their house started leaking while he was out of town. It leaked for about a month. The city water supplier noticed it when the meter reported use of 30,000 gallons of water a day—amounting to a bill of $7,500.
Q: “Does an HO-3 policy cover this?”
A: “It depends on the type of homeowners policy. Is it an ISO or a non-ISO form?
If it’s an ISO form, we also need the edition date to know for sure. If it’s not an ISO form, we need a searchable PDF of the complete non-ISO form in order to review the specific language in the insurance contract and determine coverage.
Let’s assume it’s an ISO form. ISO added an exclusion for water under Property Not Covered in the 2000 edition of its policies. That means the 2000 and 2011 editions specifically exclude water as a type of covered personal property.
But prior editions of the ISO HO-3—including 1976, 1984 and 1991—cover water loss, right? Not so fast. Even if water is not excluded as a type of Property Not Covered, a ‘covered peril’ must cause the loss. Damage to the water line itself is likely Coverage A and subject to open perils.
Check out a Big ‘I’ Virtual University article, ‘Tree Roots and Sewer Lines,’ that discusses coverage for water and sewer line breaks. But remember: Under an unendorsed HO-3, loss of the water itself is subject to named perils and may or may not be covered, depending on exactly what caused the leak and resulting loss.”
Bill Wilson is director of the Big “I” Virtual University.
This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, email logon@iiaba.net to request login information.
