Does apartment insurance cover sewer and drain backup?

Standard commercial property insurance policies exclude damage caused by water that backs up through sewers, drains, and sump pumps. The ISO Causes of Loss forms (CP 10 30, Special Form, Exclusion B.1.g) specifically exclude water that backs up or overflows from a sewer, drain, or sump. This is a significant exclusion for apartment buildings because sewer backups are a common and costly event, particularly in older buildings with aging plumbing infrastructure and in areas with combined sewer systems that can become overwhelmed during heavy rain.

Sewer backup coverage can be added to a commercial property policy by endorsement. The endorsement typically provides coverage subject to a sub-limit (a lower limit than the overall property coverage), commonly ranging from $25,000 to $250,000 per occurrence. The sub-limit should be set based on the potential scope of damage, considering how many units could be affected by a backup event and the cost of cleanup and restoration.

Damage from sewer backups can be extensive. Raw sewage in tenant units requires professional cleanup, replacement of contaminated flooring and drywall, deodorization, and potentially tenant relocation during the restoration. A single backup event affecting multiple ground-floor units can easily cost $50,000 to $150,000 or more. Cleanup must comply with OSHA bloodborne pathogen standards (29 CFR 1910.1030) when sewage is involved, and some states classify sewage as a biohazard requiring licensed remediation contractors. For apartment owners, adding the sewer backup endorsement with an adequate sub-limit is a relatively inexpensive way to address a common and potentially expensive exposure.