What Is Water Damage Legal Liability Insurance?

Water damage legal liability insurance refers to a type of policy that provides financial protection to a person or business that unintentionally causes water damage to the property of another.

For individuals, water damage legal liability insurance and the cost for it is typically included in renter, homeowners, and condo insurance policies.

key takeaways

  • Water damage legal liability insurance is a type of policy that covers an individual or business that unintentionally causes water damage to someone else's property or possessions.
  • This type of insurance is generally part of a homeowners or renter's insurance policy.
  • To be covered, the water damage usually has to be caused by a sudden event or accident.

How Water Damage Legal Liability Insurance Works

Water damage legal liability insurance is a kind of liability insurance. Liability insurance is itself a type of coverage that protects an individual or business from the risk of being sued or being held legally responsible—that is, liable—for something. Liability insurance policies can cover both legal costs and any legal payouts for destruction, damage, or injury, however inadvertent, which the insured is deemed responsible for.

There are various situations when water damage legal liability insurance could help protect an individual from enormous costs. If the owners of a second-floor condo unit experienced a water heater explosion, for example, and the water leaked into any units on the first floor, water damage legal liability insurance would protect the owners of the second-floor condo by providing the money to repair the damage to the first-floor units. If the owners of the second-floor condo did not have water damage legal liability insurance, they could be held responsible for the repair costs themselves.

Homeowners Policies and Water Damage Legal Liability Insurance

Homeowners insurance policies generally include water damage legal liability, either as part of the personal liability coverage or in a separate rider. Generally, the water damage has to be the result of a sudden event or accident—something unforeseen and inadvertent, like a leaking air conditioner, burst pipe, malfunctioning washing machine, or the aforementioned water heater rupture. The liability extends to damage, destruction, or injury to others' structures, belongings, or even persons.

However, if the triggering event and ensuing water damage are caused by poor maintenance, malfeasance, or deliberate carelessness, the liability coverage might not apply or your insurance company might reject the claim.

How to increase or improve your coverage

Not all policies include water damage legal liability insurance, so it is important to read the insurance contract carefully. A more common issue, however, is not the existence of the coverage but the extent of it. Most standard homeowners policies provide a basic limit of liability of $300,000 for property damages or injuries; this amount can be increased (for an additional premium, of course), but often only to a specified limit.

If you want broader liability coverage than that provided by your homeowners insurance, you could purchase what is commonly called an umbrella insurance policy. Personal liability insurance makes payments on the policyholder's behalf in cases of at-home and auto accidents, as well as situations that involve libel, slander, vandalism, or invasion of privacy. The policy also covers injuries that occur at secondary residences or seasonal homes, within recreational vehicles, on the premises of rental properties, or on a boat or watercraft owned by the policyholder.