Does Car Insurance Cover Water Damage?

While you never want to experience any damage to your vehicle, sustaining water damage — especially to the engine — is one of the worst and most costly non-crash-related incidents you can experience.

Water damage to vehicles is oftentimes caused by flooding, but it can be due to heavy rains pooling in the middle of a washed-away street, natural disasters or many other scenarios. Let’s take a look at whether or not your car insurance will cover water damage, what’s involved in filing a claim and much more.

Yes, water damage to your vehicle, and anything that is permanently attached to it, is covered if you have comprehensive protection on your policy. Water damage coverage kicks in for a multitude of different scenarios, including if your vehicle is carried away by a flood or storm surge and even if you just forgot to roll up your windows during an overnight rainstorm.

You’ll need to have comprehensive coverage, though, as it protects your vehicle when it sustains damage that isn’t due to a wreck or an incident with you behind the wheel. It primarily helps to protect your vehicle against natural disasters like hurricanes, tornadoes, earthquakes and hail, but it also protects it from theft and vandalism.

Luckily, comprehensive car insurance also covers water damage to your engine due to the same types of natural disasters like hurricanes, tornadoes, hail storms and floods. It should cover any water damage to your engine in scenarios like your vehicle’s hood allowing water to seep through and destroy your engine, a hurricane that makes it rain sideways into your engine or a flood that makes its way into your engine block.

However, if you drive your vehicle through a puddle in the road or are behind the wheel when water damage to your engine occurs, there’s a chance you could be found liable by your insurer. If that’s the case, you won’t be covered and you’ll have to pay for the engine repairs yourself.

If your insurer covers water damage to your vehicle, your comprehensive coverage will kick in to pay for the damages up to your policy’s limit or, if your vehicle is deemed a total loss, they’ll pay up to your vehicle’s value. All you’ll need to do is pay your auto deductible and your insurer will pay off the remaining amount.

Since vehicles are depreciating assets, their values reduce over time and there’s a good chance it’s not worth as much as you think. If you’re financing your vehicle and owe more than it’s worth, your insurer would pay a total loss claim directly to your lender and you’d be stuck paying the rest.

Luckily, you can invest in gap insurance, which pays the difference between your loan’s value and what your vehicle is worth when it’s deemed a total loss.

Comprehensive coverage is a portion of full coverage auto insurance. If you just have liability and collision coverage on your auto policy, unfortunately, you won’t have coverage for any type of water damage to your vehicle.

Liability is designed to cover the other driver’s vehicle and any passengers inside if you’re in an accident and found liable. Collision coverage is designed to pay for your vehicle and any passengers inside if you’re in an accident — whether you’re found liable or not. Both coverages also help pay for medical bills and legal expenses.

If you’re leasing or financing your vehicle, there’s a good chance your lender will require you to maintain comprehensive coverage while you still owe money on the vehicle or are still leasing it.

This is because the vehicle is still owned by the lender, who even holds the title to the vehicle, and they must protect their investment in case something were to go wrong.

Once you own the vehicle in full and the title is in your possession, you can get rid of comprehensive coverage if you’d like. However, that’s not always the best idea. If your vehicle is still worth $3,000 or more, it’s a smart idea to keep your comprehensive coverage. If you have an older vehicle worth less than $3,000, you may be OK dropping comprehensive coverage.

It only costs about $50 to $200 per year — depending on your auto insurance score and driving history — and can reimburse you for the full value of your vehicle if it’s deemed a total loss due to water damage or many other perils.

Let’s look at a real-life example that could actually happen, and what would occur if you have or didn’t have comprehensive coverage.

Let’s say your vehicle is parked at your home, a store parking lot or somewhere else. An unexpected flood comes through and brings water up to your doors. Water gets into your engine and your vehicle is deemed a total loss, meaning it would cost more to repair than it’s worth.

If you had comprehensive coverage, your insurer would cut you a check for the damage, minus your deductible, which you could use to purchase a new vehicle. If your vehicle is still worth $15,000 and you have a $500 comprehensive deductible, that check would be for $14,500.

If you still owe $4,500 on your car loan, your insurer would send that money directly to them and you’d get a check for $10,000 (because you still need to pay off your lender.

On the other side of the spectrum, let’s say the same damage occurs but you don’t have comprehensive coverage. Well, you’d be out of luck and outside of your coverage, leaving you high and dry by receiving nothing from your insurer and having to pay $4,500 to your lender for a vehicle you can’t even drive. You’d also have to get a new car, so it’s a double-edged sword.

Filing a water damage car insurance claim is fairly easy. All you need to do is document the damage and contact your insurance agent. If your claim is legitimate and qualifies for coverage, you’d just have to pay your comprehensive deductible, get your vehicle repaired and your insurer would cut you a check for the repairs.

If your vehicle is deemed a total loss, your insurer would cut you a check for its value. If you still owe your lender, the remaining balance would be paid to them first and the remaining amount, if there’s any left, would go to you. That’s why we recommend investing in gap insurance if you still owe money on your vehicle — especially if your loan amount surpasses your vehicle’s value.