Water damage poses a significant risk to the business you’ve worked so hard to build, particularly during cold and slushy winter months. Property insurance policies provide important protection to millions of businesses like yours, but some find the options for water damage coverage confusing. To help keep your business safe and dry, it’s important to know the risks, take steps to avoid a water intrusion and understand your insurance coverage.

Water Intrusion Risks

Below-zero temperatures, snow and ice and the eventual springtime melt can all pose a risk of water damage to the structure and contents of your property. Some dangers are more apparent than others, but it’s important to keep all potential water intrusion risks in mind:

  • Basement water seepage
  • Burst pipes
  • Clogged gutters
  • Flooding and run-off
  • HVAC system leaks
  • Mold and rot
  • Plumbing problems
  • Poor drainage
  • Roof ice buildup
  • Sewer and drainage back-up
  • Snow melt
  • Sprinkler malfunction
  • Wind damage
  • Window and door seal leaks

Tips to Protect Against Water Damage 

To help protect your property from water damage, do the following:

  • Fix slow leaks and broken seals at the first detection.
  • Install a water leak detection device.
  • Install insulation in attics and crawl spaces to prevent pipes from freezing and bursting.
  • Monitor pipes, appliances and sump pumps during power outages.
  • Prevent gutter blockages and ice dams from forming on the roof.
  • Clear excess snow and ice away from doors and windows.
  • Talk to your insurance representative about your Property Insurance and any endorsements your business may require.

Understanding Your Property Insurance Coverage

Property insurance coverage available for water damage is typically organized into water intrusion perils and levels of coverage. Some perils are covered by your insurance, some require a broadening endorsement, while others are not typically covered under property insurance.

Covered Perils

Plumbing, Heating or Air Conditioning System Leaks: If one of these systems suffers a sudden malfunction, your business could sustain costly water damage. Sudden leaks and ruptures that require the tear-out and replacement of damaged areas of the building are typically covered.

Fire Suppression System Malfunction: A rupture or accidental discharge of a sprinkler system or other fire suppression system could cause considerable damage. Water damage caused to both real property and business personal property is typically covered.

Exterior Weather Damage: Most property insurance policies cover water damage from weather when the exterior property is damaged, causing water to enter the building. However, it’s very important to learn the details of your policy, as not all types of weather events are covered.

Available Coverage Endorsements

Flooding: Water damage that results from a tidal surge, the overflow of rivers, lakes or streams, or rapid surface water accumulation and run-off is usually not covered by property insurance policies. However, if the location of your business is designated by FEMA as above the 500-year flood level risk (Flood Zone C), a broadening endorsement may be available.

Sewer or Drainage Back-Up: Wastewater from sewers and drains can cause significant damage to your business if the systems were to get clogged and back up. However, most property policies don’t automatically include this coverage. Typically, you can get an endorsement that will provide coverage within certain conditions and sublimits.

Non-Covered Perils

Fire Suppression System Repair: While the damages caused by a faulty sprinkler system are usually covered, repairs to the fire suppression system itself are usually not.

Plumbing, Water Supply and HVAC System Repair: If one of these systems at your business breaks, your property policy coverage may cover the water damages, but not repairs to the system itself.

Slow Leaks and Maintenance Issues: While damage from sudden leaks are usually covered, damage from slow leaks, such as mold or wet rot, is considered a maintenance issue and generally aren’t covered.

Structural or Maintenance Weather Issues: Coverage is unlikely to apply if your building sustains water damage from wind, rain, snow or ice due to faulty design, construction or maintenance of the roof, windows, doors or other potential sources of water intrusion.

Subsurface Water Intrusion: Water damage to structures below ground, such as basement walls, floors or foundations, likely are not covered by property insurance policies. Rain, snow or ice seepage or other natural groundwater sources that cause this type of damage are considered typically to be a structural or maintenance issue.


Water damage risks are at a peak during winter and spring months. Understanding the risks, preventative measures and coverage options will help keep your business safe and dry this season.

For more information about water damage and available coverage, contact Lockton Affinity, the co-broker of the Elevanta Insurance Program.