Selling a water damaged house can feel overwhelming, especially in a city like Houston where severe weather and flooding are common.
Whether your home suffered from a minor leak under the kitchen sink or significant flood water damage, deciding whether to repair or sell depends on several factors. For many homeowners, selling directly to a home-buying company like Senna House Buyers offers a fast and stress-free solution.
This guide will help you determine whether to repair your home or sell it as-is. We’ll also discuss common reasons homeowners choose to sell and cover important facts about insurance, legal disclosures, and health risks.
Common Reasons People Choose to Sell a Water Damaged House
High Water Damaged House Repair Costs
Repairing water-damaged homes can become a big problem, especially if the damage affects a large square foot area. Costs for mold remediation, drying processes, and water removal add up quickly. Hiring a water damage restoration company can help, but many homeowners find the total cost of water damage repair exceeds their budget.
Health Hazards and Safety Issues
Water-damaged homes can pose serious problems, including mold growth and black water contamination. Dirty water from a flooded house or gray water from broken pipes may lead to health risks. Home inspectors often flag these as safety issues that must be addressed before a sale, leading to further damage repair costs.
Living in a Flood-Prone Area
Houston is known for its severe weather and flood-prone areas. Previous owners who dealt with natural disasters often struggle with repeated repairs. For homeowners tired of managing flood water cleanup and moisture meter readings, selling the home and starting fresh in a safer location is sometimes a more appealing option.
Understanding Your Insurance Coverage for Water Damage
Understanding your insurance coverage for water damage starts with knowing exactly what your policy includes. Additionally, about one in 50 homeowners file a water damage claim annually, representing 24% of all homeowners insurance claims.
Types of Water Damage Covered vs Not Covered
Your standard homeowner’s policy typically covers sudden and accidental water damage. For instance, if your water heater ruptures or a pipe bursts unexpectedly, your insurance will likely cover the resulting damage. Here are the main types of water damage typically covered:
- Sudden plumbing failures
- Accidental appliance overflow
- Storm-related roof leaks
- Ice dam damage
However, damage from poor maintenance or gradual leaks such as leaky pipes, usually isn’t covered. This is why it’s important to know the signs of water damage and regularly inspect your home to prevent a potential denied claim.
Flood Insurance vs Standard Homeowners Policy
One crucial distinction to understand is that standard homeowners insurance doesn’t cover flood damage. Consequently, you’ll need separate flood insurance for protection against:
- Storm surge
- Flash flooding
- Heavy rains
- Natural water overflow
Unfortunately, flood damage can be substantially more expensive than typical water damage, with just one inch of water potentially causing around $25,000 in damage.
Coverage Limitations and Exclusions
Your policy includes several important limitations you should understand. First, while your insurance might cover water damage from a broken dishwasher, it typically won’t pay for replacing the appliance itself. Additionally, most policies exclude:
- Sewer backup damage (though additional coverage may be available)
- Groundwater seepage
- Maintenance-related issues
- Mold damage (unless resulting from a covered event)
Moreover, your policy may have specific sub-limits that cap water damage coverage at a lower amount than your overall property coverage. Therefore, carefully reviewing these limitations with your insurance agent is the best way to understand your actual protection level.
Hidden Costs Insurance Companies Won’t Mention
When dealing with a water damaged house, insurance companies often gloss over several crucial costs that can significantly impact your wallet. Understanding these hidden expenses beforehand can help you make informed decisions about your insurance claim.
Additional Living Expenses Coverage Gaps
Your policy’s Additional Living Expenses (ALE) coverage seems comprehensive at first glance, but certainly comes with limitations. Rather than covering all expenses, ALE only pays for costs above your normal living expenses. For example, if you’re forced to relocate due to water damage, you’ll still need to pay:
- Your regular mortgage payment
- Normal utility bills
- Regular household expenses
Specifically, while ALE helps with hotel and restaurant costs, most policies have strict dollar limits and time restrictions. Therefore, you’ll need to maintain detailed records and receipts for any additional expenses to receive reimbursement.
Long-term Effects on Premium Rates
Filing a water damage claim can impact your insurance costs for years to come. Accordingly, homeowners typically face premium increases of 7% to 10% after filing a single claim. Since insurance companies view you as higher risk after a claim, your rates could remain elevated for five to seven years.
Furthermore, multiple claims can make matters worse. Filing more than three claims within a year might not only lead to substantial premium hikes but could also make it challenging to obtain future coverage. Some insurance companies might even refuse to insure a home with multiple water event damage claims.
Depreciation and Actual Cash Value Calculations
Understanding depreciation calculations is crucial when filing an insurance claim for your water damaged house. Insurance companies typically start by paying the Actual Cash Value (ACV) of damaged items, namely the replacement cost minus depreciation. For instance, if your five-year-old roof needs replacement, the insurance company might subtract 40% depreciation (calculated at 4% per year) from the replacement cost.
The depreciation holdback process can also catch homeowners off guard. While you might eventually recover the depreciation amount, this only happens after you:
- Complete all repairs
- Pay your deductible
- Submit proof of payment with receipts
Most policies require you to claim recoverable depreciation within 180 days of the loss. This timing restriction, coupled with the need to front repair costs, can create unexpected financial strain during the restoration process.
How to Know Whether to Repair or Sell Your Water Damaged House
Assessing the Severity of the Damage
Start by evaluating the extent of damage using tools like a moisture meter or consulting a certified home inspector. Minor leaks under a laundry room sink may only require small repairs, but standing water or roof damage from a storm can indicate more severe issues.
Calculating Repair Costs vs. Selling Price
Compare the water damage repair costs to the potential sale price of the home. For homes with fire damage, roof damage, or flood water problems, repairs may not be worth the investment. A home buyer like Senna House Buyers can offer a reasonable price for your property without requiring you to fix damaged areas.
Understanding Legal Disclosure Requirements for a Water Damaged House
Texas law requires sellers to disclose previous water damage and mold remediation efforts to potential buyers. Real estate agents can help you navigate these disclosures, but failure to include important facts can lead to legal trouble for both you and the new homeowner. Selling to a house-buying company simplifies the process, as they often purchase homes as-is and handle legalities for you.
Conclusion
Deciding whether to repair or sell a water-damaged home in Houston depends on the extent of the damage, repair costs, and your long-term goals. If you face high repair expenses, ongoing health risks, or the challenges of living in a flood-prone area, selling to Senna House Buyers can provide a quick and hassle-free solution.
The good news is that you don’t have to deal with the stress of mold remediation, moisture meters, or home inspectors. With one phone call, you can get a fair cash offer and avoid the further damage or costs associated with lengthy repairs. Contact Senna House Buyers today to discuss your options and make an important call toward a brighter future.
Water Damaged House FAQs
What types of water damage are typically covered by homeowners insurance?
Most homeowners insurance policies cover sudden and accidental water damage, such as damage from burst pipes or unexpected appliance overflows. However, damage resulting from poor maintenance or gradual leaks is usually not covered.
Does standard homeowners insurance cover a water damaged house due to flooding?
No, standard homeowners insurance does not cover flood damage. You’ll need to purchase separate flood insurance to protect against damage from events like storm surges, flash flooding, or heavy rains.
How can filing a water damage claim affect my insurance premiums?
Filing a water damage claim can lead to premium increases of 7% to 10%, and these higher rates may persist for five to seven years. Multiple claims within a short period can result in even steeper increases or difficulty obtaining future coverage.
What should I do immediately after discovering water damage in my home?
After discovering water damage, you should immediately document the affected areas by taking photos and videos. Create a detailed inventory of damaged items, save all receipts related to repairs or cleanup, and promptly report the damage to your insurance company.
What are some common reasons for water damaged house claim denials?
Insurance companies often deny water damage claims due to maintenance-related issues, pre-existing damage, or delayed reporting. They may also deny claims if they determine the damage resulted from long-term neglect rather than a sudden, accidental event.