Flood vs. In-house Water Damage: Understanding Coverage Gaps in Colorado 

Water damage is a concern for many Colorado homeowners, but not all water-related incidents are treated the same by insurance. At Home Loan Insurance, we believe it’s essential for our clients to understand the differences between coverage for flood-related losses and in-house water damage, as well as the potential coverage gaps that can leave you facing out-of-pocket costs.

What’s the Difference?

Although exact definitions may vary by insurer, you can generally think of flood damage and in-house water damage in the following ways:

• Flood damage typically refers to water entering your home from outside sources, such as heavy rain, overflowing rivers or rapid snowmelt. In Colorado, flash floods and sudden downpours can cause significant flooding, especially in certain regions. Standard homeowners insurance policies do not cover flood damage. Instead, you’ll likely need a separate flood insurance policy to financially protect your property from these events.
• In-house water damage refers to that which is caused by issues within your home, such as burst pipes, leaking appliances or accidental overflows. Most homeowners insurance policies cover sudden and accidental in-house water damage, but there are exceptions. Gradual leaks, poor maintenance or sewer backups may not be included unless you have specific endorsements.

Common Coverage Gaps

Many homeowners are surprised to learn about gaps in their coverage, including:

• No flood insurance—Without a dedicated flood policy, you may be responsible for all repairs after a flood event.
• Lack of sewer or drain backup coverage—Standard policies often exclude water damage from sewer or drain backups unless you add a rider or endorsement.
• Gradual leaks—Damage from slow leaks or long-term issues is usually not covered, as these are likely to be considered a maintenance issue.

How Our Team Can Help

At Home Loan Insurance, we help Colorado homeowners review their current policies, identify potential coverage gaps and secure the right financial protection for their needs.

If you’re unsure about your coverage or want to discuss your options, contact us today.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.