Michigan & Ohio Flooding: What Property Owners Must Know About Water Damage Insurance Claims After Catastrophic Storms
Recent catastrophic flooding in Washington State highlights the growing risks facing commercial building owners and homeowners, including in the Midwest. Like what we are seeing in Washington’s catastrophic floods, extreme rainfall leads to Michigan flood insurance claims, Ohio flood insurance claims, sewer backups, and other forms of water-damage insurance claim disputes. Because insurers classify water losses differently depending on the source of the water, many homeowners experience delays, underpayments, or denials during storm damage insurance claim reviews—particularly when the loss involves sewer backup insurance, Michigan endorsements or ambiguous policy language.
Since our attorneys are licensed in both Michigan and Ohio, we will address those two state laws specifically as we watch the tragedy unfold in the Washington flooding.
Disclaimer: This article is for informational purposes only and everyone’s case and your state law may make for different results. Contact us to discuss your specific flood and catastrophic water loss property insurance claim.
How Flooding and Water Damage Insurance Claims Are Treated Under Michigan and Ohio Insurance Policies
Michigan and Ohio insurance policies follow similar structural rules:
Flooding is excluded under standard homeowners insurance.
A “flood” is generally defined in the policy as water that originates outside the home and rises or flows over land. Flood losses typically require separate coverage through:
FEMA’s National Flood Insurance Program (NFIP), or
a private flood insurance policy.
Important:
Like many property owners across the country, many Michigan and Ohio homeowners and commercial property owners are not in FEMA flood zones but still experience flood-like damage due to extreme rainfall overwhelming municipal systems.
What IS Covered: Sewer Backup, Drain Backup, and Sump Pump Failure (Endorsements Required)
In both Michigan and Ohio, standard HO-3 policies do not cover sewer or drain backups unless the insured has purchased a sewer backup or sump pump failure endorsement.
These endorsements may cover damage caused by:
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failure of a sump pump,
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water backing up through sewers or drains,
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overflow from a plumbing system.
BUT in the case of your home, the coverage limit is often $5,000–$10,000, unless the homeowner specifically increased it.
Michigan law:
There is no statute requiring insurers to offer sewer-backup coverage. It is contractual. Claims are governed by the policy language and Michigan case law interpreting exclusions (e.g., surface water, water below the surface of the ground, and municipal backups).
Ohio law:
Same structure. Sewer-backup coverage must be purchased separately and is determined by the policy terms.
Surface Water vs. Water Backup — The Most Common Dispute in Both States in Water Damage Insurance Claims
Insurers frequently classify a loss as surface water because:
“surface water” is excluded,
“flood” is excluded,
and misclassifying the loss limits their payment obligations.
BUT a water-loss event may NOT be true “surface water” if:
a municipal system failed,
a blockage caused water to reverse direction,
a sump pump malfunctioned,
an interior plumbing component caused the loss.
These distinctions matter because they determine whether the loss is compensable under:
the homeowners policy
a sewer backup endorsement
NFIP flood coverage
or not covered at all
This is the core of most Michigan and Ohio water-loss litigation.
Michigan’s Penalty-Interest Statute (MCL 500.2006) applies to Water Damage Insurance Claims
Michigan provides a powerful consumer protection tool:
If an insurer unreasonably delays or denies payment of a claim, it may be required to pay 12% penalty interest.
This applies to first-party property insurance claims, including:
water damage,
sewer backup claims,
storm damage claims,
fire losses.
This statute does not require proof of “bad faith”—only unreasonable delay or failure to pay a claim when liability becomes reasonably clear.
Stuart Sklar, co-founding partner of Fabian, Sklar, King & Liss, recently argued in Lansing on behalf of Michigan’s insureds asking the Michigan Senate to once again consider enacting bad faith laws to better protect Michigan insureds.
Ohio does not have a direct equivalent statute to Michigan’s Penalty Interest Statute , but…
Ohio Allows Bad-Faith Claims and Punitive Damages in Water Damage Insurance Claims
Under Ohio law, an insurer may be liable for bad faith when it:
delays payment without reasonable justification,
refuses to investigate properly,
misclassifies a loss to avoid paying,
or uses policy language unreasonably.
Ohio courts allow:
extra-contractual damages,
attorney fees, and
punitive damages when misconduct is proven.
This is a stronger remedy than Michigan’s, but Michigan’s penalty-interest statute is automatic and does not require litigation over state of mind.
The differences in different jurisdictions is something we regularly discuss with clients who own properties in different states and jurisdictions.
Why Washington’s Flooding Matters to Michigan and Ohio
Washington’s flooding is a preview of what we regularly see in the Midwest:
Extreme rainfall overwhelming storm drains
Mass basement flooding
Widespread sewer backups
Infrastructure unable to handle water volume
Insurance companies disputing whether the loss is “flood,” “surface water,” or “backup”
Michigan and Ohio homeowners face identical classification battles after major storms.
When Homeowners and commercial Building owners Should Seek Help With a Flood, Sewer Backup, or Water-Damage Claimant
Policyholders should seek guidance when:
The insurer calls the loss a “flood” even though water entered through sewers, drains, or sump systems
Payment is limited to a low backup endorsement that does not reflect the true cause
The company delays inspection or stalls the claim
There is a dispute over whether water came from outside (excluded) or inside (covered)
A commercial property faces business-interruption issues alongside water damage
In Michigan and Ohio, both states place the burden on the insurer to conduct a good-faith investigation and apply the policy correctly. We find that the earlier we are involved in the process, the smoother the claim likely unfolds and the better we can protect your interests from some of the standard pitfalls we see every day.
Protecting Yourself Before the Next Storm
Michigan and Ohio property owners can take proactive steps:
Review your policy endorsements.
Look for:
sewer or drain backup
sump pump failure
increased limits
water damage riders
Document property conditions:
Grading, downspouts, sump pumps, storm drains, and maintenance records matter in disputes.
Understand the difference between “flood,” “surface water,” and “backup”. The classification determines coverage.
Call for help early if the claim starts to go sideways.
Time matters. Early misclassification is the #1 problem in Midwest water-loss claims.
Discuss Your Property Loss With Our Team
As extreme weather continues, Michigan and Ohio homeowners face increasing risks of water-damage claims—many involving complex disputes over flood vs. backup vs. storm damage. Understanding policy language and state-specific consumer protections is essential when navigating these claims.