Commercial water damage insurance: A business owner's guide to coverage and claims
Water damage can happen without warning and cause major issues for your business. Burst pipes and plumbing leaks, especially if they go undetected, can lead to costly repairs, cleanup, and downtime. Progressive Commercial has tailored solutions to protect your property and help you recover quickly if your business springs a leak.
In this guide, we'll walk through what commercial water damage insurance typically covers, what it doesn't, and how to navigate claims so your business stays protected.
What does commercial water damage insurance cover?
When choosing business insurance, it helps to know which types of water damage are usually covered and which aren't. These details depend on a few factors:
- Your policy: Insurance that applies to your building and business property, such as commercial property coverage, can help with some types of water damage. Other policies, like general liability, may apply if you cause water damage that affects someone else's property.
- Source of water: Damage from internal sources, like burst pipes and broken sprinkler systems, is more likely to be covered than water entering from outside.
- Nature of incident: Sudden and accidental water damage is typically covered, but issues that develop over time probably aren't.
What isn't covered by commercial water damage insurance?
Commercial water damage insurance isn't designed to cover every water-related loss. Some situations are commonly excluded from standard commercial insurance policies, including:
- Flood damage: Floods and storm surges caused by weather events usually require a separate flood insurance policy.
- Gradual leaks: Water damage from long-term leaks and poor maintenance probably won't be covered.
- Sewer backups or drain overflows: These issues may require additional coverage via an endorsement.
What causes commercial water damage?
Commercial water damage often stems from everyday building systems or equipment failures. Even small issues can escalate if they aren't addressed quickly. Some common causes are:
- Plumbing issues and burst pipes
- Roof leaks and structural damage
- Malfunctioning appliances and HVAC systems
- Sprinkler system failures
Who needs commercial water damage insurance?
Businesses that own or lease property, equipment, or inventory should consider protection for water damage. This coverage is included in the commercial property portion of a business owners policy (BOP). Some examples of industries that can benefit from this protection include:
- Restaurants and cafés
- Retail stores
- Healthcare facilities
- Storage warehouses
- Manufacturing businesses
- IT data centers
- Salons and spas
- Gyms and fitness studios
What types of insurance protect against commercial water damage?
Commercial water damage protection is typically provided through property-related business coverages, such as:
Commercial property
Progressive Commercial offers commercial property coverage as part of a BOP. This coverage helps protect the building, equipment, and inventory that your business owns or rents from certain risks.
In many cases, commercial property insurance can cover water damage caused by sudden and accidental incidents, such as a burst pipe, unexpected leak, or sprinkler system malfunction. Your policy probably won't cover damage caused by gradual leaks, mold, or drain backups related to wear and tear.
Floods and storm surges are also usually excluded. In some cases, rain damage might be covered if it results from another covered event, such as wind damaging the roof. Speak with a Progressive Commercial insurance specialist to learn about coverage for natural disasters.
Business income
Business income insurance, also called business interruption insurance, doesn't cover water damage itself. Instead, it can help replace lost income and pay ongoing expenses like rent and payroll if a covered water damage event forces your business to temporarily close. This coverage is available through the commercial property insurance on your BOP.
Use the right words when filing a claim
When filing an insurance claim for water damage, be careful with how you describe it. Avoid using the word "flood" if something like a leak or burst pipe causes water to overflow inside your property. Most standard policies define "flood" as an inundation of inland or tidal waters. Using accurate language can help your claim be evaluated correctly.
Filing a water damage claim: A step-by-step guide
If your business experiences water damage, taking prompt and thoughtful steps can help get you up and running again. Here's what to do:
- Secure the area and shut off the water source, if possible.
- Contact your insurer to report the claim.
- Document the damage with photos and videos.
- Take reasonable steps to prevent further damage, such as removing standing water and running fans to dry the area.
- Provide your claims adjuster with detailed information and property access.
Tips for preventing water damage for business owners
While you can't prevent every kind of water damage, regular maintenance and preparation can help reduce risk. Consider the following steps to avoid insurance claims for water damage:
- Regularly inspect plumbing equipment like pipes, hoses, and HVAC systems and replace worn parts.
- Maintain the building structure by inspecting the roof, clearing gutter debris, replacing cracked shingles, and attending to water pooling at the foundation.
- Install leak detection to catch issues early.
- Train employees to spot signs of water damage and respond quickly.
Getting business coverage through Progressive Commercial
Don't wait until you have water damage to see if your business is protected. Speak to a Progressive Commercial expert to ensure you have the right coverage. As a trusted provider for more than 50 years, we'll help you choose insurance that fits your needs. Call us today or start a customized quote online .
Frequently asked questions about commercial water damage insurance
Does my general liability policy cover water damage?
General liability insurance may cover damage you cause to someone else's property, like breaking a water pipe while working at a client's location. But it doesn't cover damage to your own property or to customer property in your care, custody, or control.
What's the difference between a burst pipe and a gradual leak?
The difference lies in how the damage occurs. Insurance policies generally cover sudden, accidental events, like a burst pipe. However, damage caused by neglect or gradual leaks is usually excluded.
Is flood insurance included in a standard policy?
No. Flood insurance isn't included in standard commercial property or general liability policies. You'd need a separate flood insurance policy to be protected.
Does commercial water damage insurance cover mold remediation?
It depends. If the mold results from a covered water damage event, insurance can usually help. Your policy probably won't cover mold if it's caused by poor maintenance or a delay in addressing a water issue.
How do insurers differentiate between water damage and flood damage?
Water damage generally involves internal sources, such as plumbing or sprinkler systems. Flood damage involves water entering the business property from the outside. Describing the water source accurately can help ensure your claim is reviewed appropriately.
