Homeowners Insurance: Insuring your finished basement

Homeowners Insurance: Insuring your finished basement

You have just completed your $50,000 dream cave. Your basement, once a dark and gloomy place, is now a living room devoted to all things New York Football Giants. Tomorrow, unbeknownst to you, it's going to rain like crazy and your finished basement will have 3 inches of water in it. Does your homeowners insurance policy cover the damage? Unfortunately, Homeowners Insurance policies exclude damage caused by water that seeps through foundation walls. Therefore, the damage would be excluded.

The good news is that you can purchase an endorsement to provide coverage in some circumstances.  The ISO Homeowners Policy can be endorsed with the Limited Water Back-Up And Sump Discharge Or Overflow (HO 04 95; HO 23 85 NY) form, which states:   We will pay up to the Limit Of Liability shown in the Schedule for direct physical loss, not caused by the negligence of an "insured," to property covered under Section I caused by water, or waterborne material, which:

  1. Originates from within the dwelling where you reside and backs up through sewers or drains; or
  2. Overflows or is discharged from a: a. sump, sump pump, or b. related equipment …

Beginning with the 2011 edition of this endorsement, the previous fixed limit of $5,000 was expanded to a selection of limits ($5,000, $10,000, $15,000, $20,000 or $25,000).

In addition, you should also purchase a flood insurance policy. A flood insurance policy will cover water that seeps through foundation walls, backs up through sewers or drains or discharges or overflows from a sump pump if there is a flood in the area and the flood is the proximate cause of the seepage, sewer back up or sump pump discharge or overflow. Flood insurance policies have limited coverage for basements.

If you would like to review your homeowners insurance to see if your finished basement is properly covered, please call The Russell Agency at (888)926-3564.

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