Does home insurance cover water leaks?

A sudden escape of liquid can wreak havoc on your home and contents. Depending on the circumstances of the situation your insurance policy may cover you under the insured event of ‘Escape of liquid’.

But what exactly counts as escaped liquid, and what can you do to help prevent it from happening?

We'll run you through what you need to know, from prevention through to what insurance should cover.

Loss or damage from water leaks or water damage are considered common for home insurance claims.

For example, Budget Direct Home Insurance (and Home and Contents Insurance) covers loss and damage caused by ‘Escape of liquid’; for both;

• a sudden escape of liquid, or

• Liquid that has escaped slowly over time (as long as you couldn’t reasonably be aware of it).

So if a pipe bursts all of a sudden, or minor dripping inside a wall builds up over time, this will most likely be a covered event.

Sometimes the source of the leak is not obvious, so some investigation may be required to find the source. If we accept your claim, we'll also cover the reasonable costs to investigate the cause of the escape of liquid, along with repairing loss or damage caused by necessary exploratory works. 

Sometimes water damage will rear its ugly head, and it's important to address the source of the issues right away so the damage doesn't get worse over time.

Home and contents insurance does not cover the cost of repairing a burst pipe or the source of the leak. 

Instead, the loss or damage from the cause of escape of liquid is covered.

But to actually understand if your insurance covers water damage, always refer to the relevant Product Disclosure Statement (PDS) for full details of cover as terms, conditions, limits and exclusions apply. If you're a Budget Direct customer, you can find your PDS online.

‘Escape of liquid' is when water (or other liquids) escapes from somewhere, usually causing damage. This could be caused by a wide range of situations around the home, including:

• A washing machine with a broken drain pipe

• A burst pipe in the bathroom

• A fixed heating system that leaks

• An aquarium or waterbed that ruptures.

However, we do not cover wear and tear. Leaks are often preventable by having a good maintenance regime at home. An example of this would be checking the sealant around sinks to ensure it is not cracking; if it is you should take steps to replace it.

Ideally, you would be able to prevent an escape of liquid before it even had the chance to damage your property.

To help minimise the chance of this happening, here are some simple steps you can follow:

Flexi-hoses are one of the most common causes of water damage in the home. So, if you're going to start anywhere to prevent an escape of liquid, it's here. 

At least twice a year, lightly run your fingers and thumb along the length of the braided hose. Generally, it should feel flat and smooth. If you feel anything rough, spiky, or bulging, this could mean the hose is fraying or unravelling.

If that's the case, it's worth having a plumber and/or tradesperson change them over for you.

According to our survey on Escape of Liquid, when asked how often they should check their flexi-hoses, nearly 30% of respondents said they don’t know what a flexi-hose is.

Whether it's old hoses or heating systems, if a water system on your property has a manufacturer and/or maintenance date, make sure you're aware of it.

A lot of flexi-hoses that you'll find around the house will have 5-year warranties.

If that's the case, that's the manufacturer's way of saying they only see it surviving for 5 years. At that point, you're best off replacing it safely, before it has a chance to leak.

Don't ignore a few random drops you might see under the sink.

If you spot the early signs of escaped water, you're actually lucky, you've probably caught it before it could cause any major damage.

Make sure you keep the area dry, keep water from touching any cabinetry or walls (if possible) and have the leak repaired or resolved as soon as possible.

If you're going away on holiday, it’s a good idea to turn off your water at the mains. The water main is usually located outside, near the front of your house. If you turn the valve handle completely clockwise, you'll stop water from reaching your house.

That way, if a pipe unexpectedly bursts while you're away, the potential damage will be minimised.

If the worst happens and you need to claim on your home and contents insurance for escape of liquid, we're here to help.

If you're at home when your flexi hose bursts, turn off the water at the mains straight away to minimise the damage before calling us. 

Once the leak has been repaired by a licensed plumber to find and fix the source of the leak, you can then contact us to lodge your claim. 

We can then appoint an assessor to review the water damage to your home (such as to carpets, walls, or cupboards) and discuss the next steps to get things back in order.

If we accept your claim for escape of liquid, we'll pay reasonable costs to investigate, especially if it's causing damage to your home or contents. And if the damage caused means you can't stay living at your insured address, then we will pay for temporary accommodation.

And if you choose Budget Direct, you can receive 30%^ off your first year's premium when you purchase a new Home and Contents Insurance policy online.