Water Damage in Rental Property: What Landlords Need to Know

Laura Olson
Mar 23, 2023

Water damage is near the top of the list of problems a landlord never wants to have. It can be one of the trickier types of damage to a rental property since you often have limited insight into the extent of the damage without opening up some walls or floors.

Because water damage can often result in the need for costly and stressful repairs, landlords should understand their options for managing and protecting their rental properties.

This article delves into the details of water damage in a rental property. You’ll learn what landlords need to know, when to use your landlord insurance to cover any damages, and how to ensure the protection of both tenants and landlords.

What Qualifies as Water Damage?

Water damage can be described as any physical damage to a rental property resulting from water or moisture. It can be caused by natural disasters such as flooding or ice storms or accidents such as bursting pipes or sewer backups.

Water damage can also occur due to negligence by tenants. They may leave windows open during rainstorms or fail to turn off their taps properly, resulting in rot, mold, or mildew growth.

Landlords can also be responsible for water damage in rental properties. Poorly maintained plumbing systems, faulty appliances, and deferred maintenance can all result in water damage if left unchecked.

The cost of repairing water damage to a rental property can be substantial. It depends on the extent of the damage and how long repairs take to complete. Water damage repair averages $3,362, according to Angi.

Sometimes, entire rooms need to be gutted and replaced with new drywall and other materials. Depending on the circumstances leading up to the damage, it could fall on the landlord or tenant to pay for repairs and replacement items.

Landlord Insurance Coverage for Water Damage

Coverage for water damage varies from policy to policy. Generally, most policies will cover the cost of repairs for sudden and accidental events such as pipe bursts.

Some policies may provide limited coverage for mold-related repair depending on the cause and extent of the problem. In many cases, a standard landlord's insurance policy may include add-on options for additional water damage caused by events such as a sewer back-up or flooding.

Most policies do not cover tenant negligence or intentional acts.

Read your policy carefully to understand the full extent of coverage you will receive in case of a water damage event. Property damage and any landlord belongings used for repair maintenance are usually covered, as well as any lost rental income due to an inability to use the premises during the course of repairs.

Knowing what is (or isn't) included in your insurance policy can help ensure you have the proper protection against future occurrences.

When Is the Tenant Responsible for Water Damage?

In most cases, tenants are responsible for any damage they cause to the property due to their negligence.

Suppose a tenant causes water damage because they left a window open during a storm, failed to completely turn off their faucet, or damaged pipes due to improper usage of appliances. In those situations, tenants are typically responsible for the cost of repair and replacement items.

Property owners should also know that some landlord insurance policies will not cover damage caused by pets. If a pet causes water damage, the tenant may be liable for the costs associated with repairs. Tenants may also be held responsible for damage due to the intentional destruction or vandalism of a rental property.

In these instances, tenants could be liable for covering repair costs up to the amount of their security deposit or for full reimbursement to the landlord if additional funds are needed.

However, many states have specific rules about when a landlord can or cannot use a tenant’s security deposit for damage repairs. Both tenants and landlords need to be familiar with state landlord-tenant laws to ensure everyone gets treated fairly.

When Is the Landlord Responsible for Water Damage?

Landlords are responsible for providing tenants access to safe and sanitary housing, including taking steps to prevent water damage in rental units.

If damage occurs due to an event such as a burst pipe, malfunctioning appliance, or roof leak, take swift action and provide necessary remediation. Furthermore, rental units should be inspected regularly for signs of damage from water, including peeling paint, rotting wood, or growing mold.

Property owners may also be liable if their negligence caused a tenant’s possessions to be lost or damaged due to water damage. For example, if a landlord did not repair a leaky roof and, as a result, water damages a tenant’s belongings, the landlord may be responsible for those losses.

Landlords may also be liable for any consequential losses, such as the tenant's lost wages and medical expenses. Legal fees may also need to be considered, depending on the situation. Landlords should consider these potential costs when deciding how much coverage is necessary for a landlord insurance policy.

Maintaining good communication with tenants is key to ensuring any problems or concerns are dealt with quickly and appropriately. Respond promptly to reports of water damage so remediation can begin right away.

Staying on top of maintenance and keeping an open line of communication with tenants can help prevent expensive repairs in a rental unit.

Minimizing Water Damage in Rental Properties

In addition to having adequate landlord insurance coverage, landlords can take several proactive steps to reduce their risk of water damage.

1. Inspect all plumbing fixtures regularly. Look for signs of wear and tear or any other issues that could lead to leakage or flooding. Ensure all faucets, toilets, tubs, showers, and appliances connected to plumbing systems are working properly.

2. Ensure proper drainage. Be sure all gutters and downspouts are installed correctly, securely fastened to the building, and free of debris. Inspect them regularly for blockages or damage and take action if required.

3. Check windows and doors for any signs of water intrusion. Look for discoloration, warping, mold growth, or other signs of water damage. Seal any cracks or gaps with caulk or weather stripping to prevent future leaks.

4. Install an automatic shut-off valve on your main water line so you can quickly turn it off in a plumbing emergency. This valve prevents flooding from burst pipes while you are away from the property or unable to respond in time.

5. Provide tenants with detailed instructions on how to shut off the water supply in an emergency. Doing so will ensure tenants can address any plumbing issues quickly before they become serious problems.

6. Have a professional plumbing inspection done once a year. It may seem expensive, but it will help identify and address potential issues before they become significant problems.

7. Install an alarm system with water sensors in areas prone to flooding, such as the basement or by washing machines. An alarm alerts you to water detected at levels that could cause damage, giving you time to take action before serious damage occurs. Here are some water sensor systems to consider.

8. Insulate exposed pipes in cold areas of the property to prevent them from freezing and bursting during winter months. Steps like this will also help reduce energy costs.

9. Provide tenants with information about identifying potential signs of water damage, such as discoloration on walls or ceilings, musty odors, or warm spots on floors or walls. Encourage tenants to immediately report any signs of water damage or plumbing issues so you can address them quickly and correctly.

By following these tips and maintaining an open line of communication with tenants, landlords can help prevent expensive water damage in their rental properties. Protecting your rental property from water damage is essential for a successful landlord-tenant relationship.

Wrapping Up

By understanding when tenants and landlords are responsible for damages, what landlord insurance covers, and other ways to mitigate risk, landlords can better protect themselves against water damage on their rental properties.

Water damage can be costly for landlords, especially if they don't take adequate preventative measures or have solid insurance coverage.

Obie is an online insurance broker that can simplify the process of obtaining landlord insurance and help you find the coverage that best meets your needs. Landlords can compare rates from different providers and instantly get a customized quote.

With comprehensive coverage options available, landlords can rest assured their rental property has protection against water damage, loss of rent due to tenant eviction or destruction, liability claims, and more.

To get an instant quote on landlord insurance for your rental, simply visit Obie’s website and enter your property address.