I store my tools in my detached garage. During the deep freeze of 2026, a pipe burst overhead. I didn’t go in there for three days. When I did, my table saw was a block of rust, and my cordless batteries were shorted out. I filed a claim for “Water Damage.”
Key Takeaways
- Sudden vs. Gradual: Insurance covers “Sudden and Accidental” bursts. It excludes “Seepage” or long-term leaks. Since this was a burst pipe, it should be covered, provided you acted quickly.
- The “Rust & Corrosion” Exclusion: Almost all policies exclude rust. You have to prove the damage was caused by the water hitting the tool, not the rust that formed later due to neglect.
- Business Property in Home: If this is your home garage, your Homeowners policy will deny the claim because they are “Business Tools.” You need a Commercial Property or Inland Marine policy.
- Mitigation Duties: You have a duty to “mitigate further damage.” If you let them sit in water for a week, the insurer will deny the claim based on “Neglect.”
The “Why” (The Trap): Neglect and Rust
The exclusion reads: “We will not pay for loss or damage caused by… Rust, Corrosion, Fungus, Decay, Deterioration.”
The insurer will argue: “The pipe burst (covered), but the tools are ruined because they rusted (excluded).”
You must counter-argue that the rust is the direct result of the covered peril (the water), not long-term atmospheric corrosion. The timeline is critical.
The Investigation: “I Called Them”
I simulated a burst pipe claim with three scenarios.
1. Homeowners Insurance (Allstate)
- The Claim: “My business tools got wet.”
- The Verdict: Denied. “Business Property” exclusion applies. Max payout $2,500 (if lucky), usually $0.
2. Commercial Property (The Hartford)
- The Claim: “Pipe burst in my warehouse/garage.”
- The Verdict: Covered. Water damage from a plumbing system is a standard covered peril. They paid for the saw replacement.
3. Inland Marine (Tool Floater)
- The Claim: “Tools damaged by water.”
- The Verdict: Covered, BUT they scrutinized the timeline. If I waited 2 weeks to report it, they would cite the “Rust” exclusion.
Comparison Table: Water Damage Scenarios
| Scenario | Homeowners Policy | Commercial Property | Inland Marine |
| Roof Leak (Sudden Storm) | Denied (Business) | Covered | Covered |
| Pipe Burst | Denied (Business) | Covered | Covered |
| Flood (Rising Water) | Denied (Need Flood Ins.) | Denied (Need Flood Ins.) | Denied (Usually) |
| Humidity/Rust over Winter | Denied | Denied | Denied |
Step-by-Step Action Plan
- Stop the Rust Immediately: Don’t wait for the adjuster. Dry everything. Spray WD-40 on cast iron tops. Take photos of the water standing in the room to prove the “event.”
- Separate the Damaged Items: Do not throw them away, but move them to a dry place.
- Distinguish “Flood” from “Water Damage”: Never say “My garage flooded.” Say “A pipe burst causing water damage.” “Flood” means rising water from outside (rain/river) and is almost always excluded.
- Check Your Batteries: Lithium-ion batteries that get wet are a fire hazard. Document them as “Total Loss” immediately due to safety risks. Do not try to charge them.
FAQ
Q: If the roof leaked, is it covered?
A: Yes, if the roof was damaged by a storm (wind/hail). If the roof leaked because it’s old and rotten, the roof isn’t covered, but the tools inside might still be covered under “Ensuing Loss.”
Q: Can I claim the lost income while I clean the rust?
A: Only if you have “Business Interruption” coverage. A standard Tool Floater covers the tool, not your time.
[IMAGE: Graphic showing the difference between “Standing Water” (Flood – Not Covered) and “Burst Pipe” (Water Damage – Covered).]