Sump pump failure and sewer back-up claims are one of the highest claimed losses made on a homeowners policy.  There are many factors and reasons these types of losses happen frequently and unfortunately some of them are hard to control.

• Electricity goes out during a storm
• Sump pump burned up because of heavy usage
• Left the sump pump unplugged (I’ve seen it)
• Too much rain and the pump cant keep up
• Storm sewers can’t keep up causing water to back up in your home.
• A clog in your pipes
• Tree roots blocking your pipes
• Float malfunction on the pump

Storms come and storms go, its nature.  One of these acts are bound to happen to you.  Please prepare yourself because when it does you don’t want to be on the short end of the stick with your insurance company. Lets look at two things to consider when making sure you are well covered because believe it or not most of you will have this type of loss at your home.

Additional Endorsement

Make sure you purchased the coverage.  It sounds simple doesn’t?  There are many times homeowners have been stunned they didn’t purchase the insurance.  Some even say, “If my agent would have offered it…” Most insurance policies (if not all) “out of the box” do not cover sump pump and sewer back-up claims.  I tend to believe that some agents don’t even want to tell you about the additional coverage. Why? You would think they want to sell you as much insurance as possible, right?.  Most likely they don’t because it effects their pay if their clients have claims frequently.  The sales of the endorsement doesn’t out way the cost in pay for the frequency and amount of claims.  Flat out, its high risk.  Inspect your policy and look for this coverage, if you have it GREAT!  If not, GET IT!  If you don’t understand your policy, call your agent.  They should be more than happy to help you explain if you have coverage.  If they are not happy to explain it, get a new agent immediately.

Endorsement Limit

Get the highest limit you can get for the endorsement.  Anybody that signs up for a new insurance policy from about 10 years ago to present day has limited cap on coverage for this endorsement.  The old policies, that some people still have, are Willy Wonka’s “Golden Ticket”.  The older policies provide coverage for sump pump and sewer back-up with normal policy limits.  That means if you insured the structure of your home for $250,000, you had $250,000 to replace things with same like and quality of material and labor.  Use this as a reason not to move.  If you move you lose your “Golden Ticket” policy.  Now days? It is impossible to get that coverage.

The insurance companies have now capped this coverage with much lower limits, because of the risk.  The limits I see the most are $5,000.00, $10,000.00, $20, 000.00 and $30,000.00.  Out of those? the $5,000.00 limit is most used but not nearly enough.  Some insurance companies combine contents and structure coverages together in the capped limit making it harder to restore, replace, repair your damages without “out of pocket” expense.  Again, check your policy or call your agent and get an understanding.  If it is lower than $10,000.00, get more, especially for those that have finished basements.

A Typical Scenario

Hypothetically speaking, you have a 1200 square foot basement that is half finished with a family room containing carpet, pad, drywall, detailed with nice wood trim and fully furnished with sofa, love seat,  entertainment center and tv etc.  The unfinished room is used as a laundry room with washer and dryer.  Most cases people have a endorsement coverage of a $5000.00 which includes contents and structure.

A storm came through knocking out power to your home,  your sump pump is no longer working.  This causes 3 inches of rain water to flood your basement. Just as that water came unexpectedly rushing in, so comes flooding in the stress and anxiety of trying to get your life and home in order.

First, step would be to hire a professional restoration company to come and dry out the basement.  This maybe expensive but in the long run a quality restoration company should be able to, at the least, save your drywall, trim, most likely 75% of your personal property and prevent mold and mildew from forming. Sometimes, a professional may be able save your carpet but in this case they are not able to save it.  The average bill for a restoration contractor to perform this 3-5 day drying process would be $2000.00-$3000.00.

The water damaged the bottom of the entertainment center, an end table and a computer tower that was on the ground.  The washer and dryer are salvagable but need $400.00 repair.  Carpet and pad will need to be replaced and the freezer full of food that was in your laundry room has to be replenished because the power outage spoiled the frozen meat.

Cost:

+ $2500.00 Restoration Contractor

+ $1900.00 Personal Property Damage

+ $300.00 Spoiled Food

+ $1500.00 Carpet and Pad Replaced

= $6200.00 Total

- $5000.00 Insurance Coverage

= $1200.00 out of your pocket.

This is a typical sump pump claim.  Imagine if you had drywall damage, trim needed to be replaced and you had more contents loss.  You can easily tack on another couple thousand to the “out of pocket” expense.

Conclusion

Nobody wants to think this would happen to them.  The statistics show you have a good chance for this type of damage in your home to occur.  It will definitely be a high stress situation for you and your family.  One way to relieve the stress is to know you have the sufficient coverage to bring your home back to pre-loss condition. Think about how much your contents are worth in your basement, the structure, the cost of getting your house restored and dried.  Then add 10%-15% for unknown variables you are not thinking about.  Add all of that together and the total is a great gauge in deciding how much coverage you should purchase from your carrier.