TL/DR –
Washington state Insurance Commissioner Mike Kreidler is urging residents to check their home insurance policies for water damage sublimits, which may provide lower premiums but can lead to costly out-of-pocket expenses. Five insurance companies in the state are considering selling policies with optional water damage sublimits, a term that refers to a policy which restricts the recovery to a set amount below the total coverage. Kreidler warns that while such sublimits can reduce costs, they also reduce protection and may not meet property insurance standards required by lenders.
Washington State Commissioner Advises Homeowners on Water Damage Sublimits
Date: May 10, 2024
OLYMPIA, Wash. — Insurance Commissioner Mike Kreidler of Washington state urges homeowners to check their home insurance policies for any water damage sublimits.
Kreidler warns, “A policy with a sublimit may offer lower premiums, but can bring unexpected expenses when filing a claim. Understanding the coverage you’re paying for and the potential out-of-pocket costs in case of home damage is crucial.”
Recently, five companies offering home insurance in Washington have contemplated providing policies with optional water damage sublimits. A policy sublimit limits the claim recovery to a specific amount, lower than the total policy coverage.
For example, a policy might have a maximum benefit of $500,000 with an optional $10,000 sublimit for water damage. This damage could be due to a broken pipe releasing water in your home from a sink, toilet, water heater, dishwasher, or a frozen pipe.
While adding a water damage sublimit can lower your costs, it also reduces your coverage. Furthermore, it might not meet the necessary property insurance standards stipulated by your lender.
Homeowners are urged to review their policies for water damage sublimits or consult their insurance agent or broker. For additional assistance or complaints, contact the Office of the Insurance Commissioner.
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