Solved! Does a Home Warranty Cover Water Damage?

Q: A pipe burst in the basement while we were out for the day. We arrived home to 2 feet of water in the basement—and the shutoff snapped off in my hand when I tried to turn off the water. We eventually got it turned off, but there’s a huge mess. Will my home warranty cover the water damage?

A: Well, to put it bluntly, no. But there’s some good news—your homeowners insurance most likely will. While many homeowners policies exclude water damage from rain seepage or flooding, a burst pipe constitutes damage that is coverable, so the flooring, drywall, and any possessions that have been destroyed by the water should be covered by your homeowners insurance after you’ve met your deductible.

On the other hand, your homeowners insurance will not cover the repair to the pipe itself, and if your shutoff snapped off in your hand, you’ll need to have that repaired, too. Plumbing fixes are not inexpensive, but luckily, your home warranty will cover the repair if your policy includes whole home systems including your plumbing. If the water leak is a result of age or normal wear and tear on any covered system or appliance, your home warranty will cover the repair or replacement of that component to stop the leak and prevent it from occurring again. The cleanup itself will be covered by your homeowners insurance.

There are, of course, exceptions and limits to every policy, but this is a pretty typical situation of home insurance vs. home warranty: each covers what the other does not, so the warranty will cover the repair and the insurance will cover the damage. If you have both, you likely just dodged a huge repair and cleanup bill, once you’ve met your deductible.

Technically, a home warranty will not cover water damage.

Home warranties are service contracts. They protect you from the financial impact of repairing or replacing the major systems and appliances in your home (depending on the coverage you’ve selected) that result from age or normal wear and tear. You can use the warranty for some maintenance, most repairs, and if the repairs fail, replacement of the system or appliance. There are maximum payout limits for each case, each individual system or appliance, and in total over the course of the year. As it is a service contract, however, the warranty is not responsible for covering damage.

Water damage, even if it is the result of the failure of one of the covered systems, is not a repair issue, which is why the answer to the question “does home warranty cover water damage?” is no. Homeowners insurance, on the other hand, exists to protect you financially from the damage caused by accidents, weather, fire, theft, and other unexpected and unpreventable events. After you’ve used your home warranty to repair the source of the water, you can most likely call your homeowners insurance company to place a claim for the damage.

However, a home warranty will cover the cost to repair the cause of the water damage.

What your home warranty will do, in most cases, is pay for the repairs to or replacement of the covered appliance or system that caused the water to leak. This is arguably just as important as covering the damage, because if the problem continues unabated and more damage is done, your homeowners insurance will eventually start to deny coverage as well. In addition, if you try to patch up the problem yourself, you can invalidate the warranty going forward. Pipes bursting, water heaters failing and releasing the water, and seals on clothes washers failing are all covered events when your policy includes appliances and systems. This can be a significant financial savings; often the plumber’s visit to repair the problem is as expensive (or more) than the cleanup of the damage.

There are still some exceptions, and those who have a home warranty are advised to read the details of their policy carefully.

There are, of course, limits and exclusions to this. Most home warranties will not cover roof leaks, unless you have added that coverage separately and the leak is the result of wear and tear, not storm or wind damage. Clogged gutters that cause roof leaks are also not covered—clogged gutters are a maintenance issue, and failure to keep them clear can invalidate any roof leak coverage you carry. Does home warranty cover plumbing? Yes, but not sewer line clogs, which are not usually covered by either a home warranty or homeowners insurance. And if a covered item is damaged and fails as a result, the home warranty won’t cover that. In that case, however, your homeowners insurance will: If a branch crashes through the roof and breaks a water supply pipe, causing a flood, your homeowners insurance will cover it because the situation was caused by damage, not wear and tear.

Some companies may offer limited roof leak coverage.

The best home warranty companies offer several kinds of packages. Most companies offer a whole home systems package, which covers the systems that make your home work: electric, plumbing, and HVAC, plus the water heater and often the garbage disposal. An appliance package is a second option, covering your kitchen (usually limited to primary appliances in the main kitchen) and laundry appliances. Truly comprehensive packages include both of these packages for a lower cost than buying them separately. However, home warranty companies want you to be able to customize your warranty to meet the needs of your house, so they offer add-on options, allowing homeowners to cover spas and pools, septic systems, alarm systems, and more.

The roof as a whole is not considered a home system. As a result, if a home warranty policy includes roof leak coverage, it’s most often an add-on to the policy. Some full-service policies do include leak coverage as part of a package, but most do not. Flat roofs, foam roofs, and “eco” roofs are excluded from coverage because they require specialists to repair. Roofs that are covered must be part of the main house or building: Roofs that extend over unoccupied spaces, such as porches or patios, are not covered.

Even when it is added on specifically, roof leak coverage has a tremendous number of exclusions and limitations. This is because most roof leaks occur as a result of roof damage, incorrect or amateur installation or repairs, or maintenance failures. Warranties don’t cover damage, and DIY fixes or failure to maintain the roof can invalidate your warranty. For example, if your gutters are clogged with leaves and they overflow and allow water to seep through your roof, that’s not a failure of the roof itself, in the eyes of the warranty company—it is a failure to maintain the gutters, which invalidates the claim. If you’ve installed a solar panel or satellite dish, a skylight, or you’ve done a DIY vent, those will also invalidate the claim, and rarely does homeowners insurance cover roof leaks created by those installations—so think carefully before choosing those changes. You’ll want to read the roof leak section of your policy very carefully before counting on it for a repair so you know what is covered and what is not.

If water damage causes an appliance’s malfunction, a home warranty will not typically cover the cost of repair.

When a covered appliance or system stops working, your home warranty provider should be your first call. Since you’ve paid for the warranty, use it. Make a claim, pay the service fee, and have the repair done professionally to keep your warranty in good standing and make sure the repair is properly done.

Unfortunately, you can’t use your warranty to pay for repairs to appliances that have been damaged as a result of water. That constitutes damage and is not a result of age. The chain reaction that can occur during a flooding event can ramp up repair costs quickly, but it’s important to understand who bears the responsibility for the damage. Say you experience a flooded basement from a water heater, and the leaked water gets into the coils of your basement refrigerator and shorts it out. A refrigerator with an electrical short would normally be a home warranty service call (if you’ve covered that basement fridge in your policy). In this case, however, the warranty won’t cover the refrigerator. Why? Because the problem was caused by damage, not as a result of age or wear and tear. In this scenario, your warranty will cover the repair or replacement of the water heater that leaked, but not the refrigerator, because it was damaged. Your homeowners insurance is likely to cover the refrigerator and other items damaged by the leaked water from the water heater.

Most types of water damage is best covered by homeowners insurance, but for best coverage, opt for both policies.

If your home has sustained water damage (or you’re curious about what would be covered, especially if storm season is approaching), you’ll want to read the water damage portion of your homeowners insurance very closely. Those policies also include many exclusions, such as damage caused by rainwater seepage or flooding that results from high water outside your home. But water damage resulting from covered events will be paid for by homeowners insurance. The source of the problem, if it’s from a system or appliance covered by your home warranty, will be repaired or replaced by the warranty. Especially in the case of water damage, however, you’ll be best served by the combination of the two, so that both the source of the problem and resulting damage can be restored to like-new condition and you can avoid going into debt while repairing your flooded home.