As an insurance professional, I continually remind myself that my customers (for the most part) do not fully understand the coverages that they have (or don’t have).  In all honesty, they shouldn’t have to.  If every person fully understood exactly what coverages are present, or not, in their various insurance policies, there would be no need for someone like me.  Insurance carriers would simply move their “distribution” system to an online environment (hello GEICO).  Customers would go to a website, type in what they needed coverage for (exactly), press a button, and presto!  The problem lies in the details.

Many people think they know what is covered under their various policies (like Home Insurance & Auto Insurance) simply because they can read their coverage limits off of their current declarations page.  While this does tell you what coverage limits you have, does this actually tell you under what circumstances these coverages would “kick in”.  If you really think about it, you have the insurance coverages/limits (auto and home) you have today because the first time you purchased insurance someone (friend, parent, insurance agent) told you that this limit or that was what you needed.  Under that assumption, you better hope that your source was very smart.

The value of understanding exactly what is covered and what is not on an insurance policy became clear to me when I was hit in the face with a fresh dose of reality on a snowy winter day in January.  I was just finishing a great book by Vince Flynn when my oldest daughter yelled from the basement that the floor was wet.  Having dealt with a few times where it had rained so much that water had gotten in our basement, I knew what weather conditions caused such an event.  While we had received quite a bit of precipitation, the form we received was in the form of white powder (better known as snow) and not the clear liquid which could usually lead to a basement of water.

Wearing a T-Shirt, jeans, socks, and a pair of flip-flops (I thought you should get that odd visual in your head); I rushed down the steps to get a handle on the situation.  Our washing machine is downstairs, so I first thought that maybe a hose had come loose and soaked the basement.  Once my feet landed on the terracotta-colored tile that covered the bottom stoop, I swung my gaze to the right.  As I looked into the half bathroom that was at the bottom of the steps, I realized that I would have been lucky if the water had come from the washing machine.

Much to my dismay, the “water” was coming from, and mostly contained in, the bathroom.  None of the kids had been in the basement for days, so I knew something was disgustingly wrong.  As I entered the tiny bathroom, I looked into the toilet and was overcome with….well just let me say I was overcome and leave it at that.  Evidently, my “waste” line had backed-up.  Being the lowest plumbing fixture in the house, all water and waste that had been used in the house were now backing up in this particular toilet.  Of course, a single toilet can not hold all of that run-off, so fluid had come out and onto the floor.  Needless to say, I am happy I have a strong stomach and a Shop-Vac.

Luckily for me, we caught the problem in time.  We were able to get the water off the floor and mediate the problem before any real damage was done.  However, once I was done cleaning up my first thought went to a little-known fact about home insurance.  To that end, I thought it would be helpful to give a little lesson about Home Insurance.

Homeowner’s Insurance Covered Cause Of Loss

I would assume that if I were to make a wager with every person who reads this article (which is not an insurance professional (notice I said professional and not an agent as I would win my bet with most agents)) that they could not tell me if the difference between a Named Peril Policy & a Special Form Policy, that I would make a few bucks.  The fact is, most people do not even know what a “Peril” is.  Let the class begin! gives the following definition:   Peril:  something that causes or may cause injury, loss, or destruction.

Now that we know what a “Peril” is, we need an understanding of the common property insurance forms: Named Peril & Special Form.

Named Peril

Just as the name suggests, the policy will cover only those perils that are specifically listed (named) in the policy.  Comparatively speaking, this policy type provides the least amount of actual coverage.

Special Form

In direct contrast to the Named Peril coverage form, the Special Form coverage form provides coverage for ALL Perils unless the policy specifically EXCLUDES coverage.

North Carolina Home Insurance Common Policy Form(s)

To the best of my knowledge, the majority of North Carolina Homeowner’s Policies are on one of two Homeowner’s Forms (HO-3 & HE-7).  Both of the aforementioned North Carolina Homeowner’s Forma are Special Form policies.  As a matter of performing your due diligence, I would suggest you determine which form your current home is covered under.  To be clear, when I refer to “Homeowner’s Insurance” I am referring to policies that cover your primary residence and not a property that you may hold for a rental.

Damage Caused By Water / Sewer Backup

The HO-3 & HE-7 policy forms both have the following Exclusion:

Water Back-Up Of Sewer Or Drains

Included in the HE-7 Form with the HE-21 Endorsement

  1. The policy forms exclude coverage for loss resulting from water or water-borne material that backs up through sewers or drains or which overflows or is discharged from a sump, sump pump, or related equipment.
  2. The policy may be endorsed to provide such coverage up to the policy limits of liability


Hopefully, you have a better understanding of Perils, Named Peril Policy Forms, Special Form Policy Forms, & Water or Sewer Back-Up.  You might think that this particular endorsement or coverage does not apply to you.  Let me give you a nugget of wisdom:

If you own your home, there are, to my knowledge, two ways that your “waste” can leave your house (and I am talking about waste in the plumbing since of the word).  Your home is either hooked into the city sewer system or you have a septic system.  In either case, your waste system can become clogged or broken and literally “back-up” into your home.

While I hear the argument daily about not needing this coverage because “I am on city sewer”, what you may not understand is that the city is not going to take responsibility for any damages (to the system or your property) unless the problem is found to be on their property.  That means that if there is a problem in one of the drain lines (underneath the ground) but still on your property, the “city” has determined that they are not “at-fault”, thus you get no help from them.

If your North Carolina Home Insurance policy is not endorsed to cover Water or Sewer Back-Up, you should highly consider it.  Most carriers charge an additional $25 (approximate) a year to add this coverage back.

About The Author:  Jack Wingate is the Co-Founder and President of ALLCHOICE Insurance in Greensboro, NC.  For more information about Homeowner’s Insurance, ALLCHOICE Insurance, or Jack Wingate, please visit

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