State Farm’s advertising paints a comforting picture for homeowners. On its website, the company reassures policyholders that water damage is “typically covered” when a pipe bursts, when ice dams form, or when a sewer backs up with the right endorsement. The “not typically covered” list sounds straightforward and includes flood, surface water, tidal surge, or sewer back-up without the endorsement. It appears to be a simple dividing line, with many likely interpreting it as covering normal household plumbing mishaps but not large-scale natural disasters.
Inside courtrooms where State Farm is fighting water loss claims across the country, the reality looks nothing like that neat little list on its website advertising. A recent example is an Arkansas case. 1 State Farm convinced a court that multiple exclusions, never mentioned in its consumer-facing marketing, wiped out any chance of coverage. What’s missing from the website compared to the reasons State Farm and its attorneys argue for no water damage coverage is staggering.
State Farm first argued that water damage is not covered if the leak happens gradually. Even if the home suddenly floods following a slow leak, State Farm claims in its arguments that there is no coverage. In other words, if a hidden pipe trickled for several days or weeks before busting and being discovered, you’re out of luck. Second, State Farm persuaded the court that corrosion, rust, or deterioration of the pipe is a coverage killer, even if the break itself appears abrupt. Third, the company successfully claimed that water from a broken pipe beneath your slab is excluded once it touches soil or seeps through a crack in the concrete and lumps this common scenario into the same category as natural “subsurface water.” Fourth, improper installation or construction defects in a pipe leading to water damage were raised as another potential bar to recovery, regardless of how long you’ve faithfully paid premiums. Fifth, humidity, moisture, or condensation that develops over time falls neatly into the exclusion basket as well.
If State Farm wanted its advertising to match its litigation stance, it would have to rewrite its website with brutal honesty:
- Leaks that happen over time, even several days, are not covered, even if your pipe is hidden and your home suddenly floods with water.
- Damage caused by corrosion, rust, deterioration, wear and tear, latent defects, or inherent vice is excluded, even when the leak looks abrupt.
- Water from a broken pipe under your slab that travels through soil or cracks in the slab is treated as “water below the surface of the ground” and denied, no matter how the leak began.
- Water losses involving improper installation or construction defects in plumbing or related systems aren’t covered.
- Humidity, moisture, or condensation that develops over time is excluded.
I could not find any of these examples of exclusions about coverage in State Farm’s marketing examples. Instead, the company leaves consumers with the impression that if a pipe bursts and water damages the home, they’re safely covered.
When the day comes and a claim is filed, the exclusions descend like a trapdoor upon State Farm’s policyholders. Their advertising invites trust and coverage. The courtroom arguments and those reasons for no water damage coverage deliver betrayal. This is not a “good neighbor” way of doing business.
This case should be a red flag for anyone thinking about buying a State Farm policy. It shows just how little chance the average homeowner has of recovering from a water loss when the insurer is armed with an arsenal of exclusions it never bothered to mention in its sales pitch. There are hundreds of these types of denials and arguments in court, which should be shared with customers so that everybody is on fair warning about what happens when a State Farm policyholder suffers a water loss.
I urge policyholders and others to read State Farm’s Motion for Summary Judgment in this case. State Farm should send it to its customers, warning about its interpretation of its policy limitations, before losses occur.
Homeowners deserve transparency. They deserve to know the rules of the game before disaster strikes. State Farm’s failure to disclose the true scope of its water damage exclusions is misleading. It’s a warning sign flashing in red for every potential policyholder.
Thought For The Day
“In this present day of rapid dissemination of information, it is impossible for any organization to succeed for any length of time, unless founded upon the basic principles of absolute honesty.”
—G.J. Mecherle, founder of State Farm
1 Sims v. State Farm Fire & Cas. Co., No. 4:23-CV-00813 (E.D. Ark. Sept. 4, 2025). (See also, State Farm’s Motion for Summary Judgment, and the Policyholder’s brief in opposition).