Water Damage and the

The Most Common Water-Damage Denial

Water is the most disputed cause of loss in residential property claims. A pipe fails, a supply line lets go, a water heater ruptures — and the carrier denies the claim, not because water damage is excluded, but by pointing to a specific exclusion: loss caused by “continuous or repeated seepage or leakage” of water. The denial letter says the damage happened slowly, over weeks or months, and therefore falls outside coverage.

That argument is correct in some cases and wrong in many others. The exclusion is real, but it is narrower than the way carriers often use it. Understanding what it actually covers — and who has to prove what — is the difference between an accepted claim and a denial that should not stand.

What the Exclusion Says

A common form of the exclusion in California homeowners policies bars loss caused by:

continuous or repeated seepage or leakage of water or steam that occurs over a period of weeks, months, or years.

The exact wording varies from policy to policy, so the controlling language is whatever appears in the specific policy at issue. But the structure is consistent: the exclusion is defined by time. It targets water that escapes gradually and repeatedly over an extended period. The phrase “over a period of weeks, months, or years” is not decoration — it is the heart of the exclusion.

Sudden vs. Gradual: The Dividing Line

A standard homeowners policy covers sudden and accidental direct physical loss. The seepage exclusion carves out the opposite: slow, ongoing intrusion that a reasonable homeowner could have discovered and addressed. So the dividing line is duration, not mechanism.

• A sudden event is generally covered.A supply line that bursts and floods a kitchen overnight is a sudden, accidental discharge — not “seepage … over a period of weeks, months, or years.”
• Gradual, long-term seepage is generally excluded. A fitting that has been weeping behind a wall for a year, slowly rotting the framing, is the classic situation the exclusion was written for.

The mechanism of failure — that it was a pipe — does not decide the question. A burst pipe usually produces a sudden discharge of water, even though “the plumbing failed.” What matters is how long the water was actually escaping and causing damage. Carriers frequently blur this point by treating any plumbing-related loss as “seepage,” but the policy language ties the exclusion to time, not to the type of component that failed.

Nargizyan v. State Farm (2026): New California Authority

In Nargizyan v. State Farm General Insurance Co.(2026) ___ Cal.App.5th ___ (2d Dist., Div. 7, No. B342340), the California Court of Appeal addressed exactly this tactic — and reversed summary judgment that had been entered in the insurer’s favor. The opinion was originally filed unpublished on April 15, 2026, then certified for publication by a publication order on May 14, 2026, which means it can now be cited as precedent in California. (Any attorney citing the case should confirm its current status, because the California Supreme Court’s window for review or depublication runs after the publication order.)

The homeowner noticed the tile on his kitchen floor was unusually warm, found water leaking from a hot-water pipe beneath the kitchen, and had a plumber locate and repair the leak. He reported the claim. State Farm denied it under the continuous-or-repeated-seepage exclusion, taking the position that the leak was gradual.

The Court of Appeal held that summary judgment was improper because there were triable issues of material fact about whether the loss was sudden (covered) or gradual(excluded). The court emphasized that the exclusion targets water intrusion that occurs over time, so the critical question is how long the water had been escaping — and the insurer’s own expert could not say. With no evidence establishing the duration of the leak, and indicators consistent with a sudden event, the carrier had not proven the exclusion applied as a matter of law.

Bad Faith and the Failure to Investigate Duration

Nargizyanwent further than coverage. The Court of Appeal also revived the insured’s claims for bad faith and punitive damages, holding there were triable issues about whether the carrier investigated the claim fairly. The record allowed a jury to find that the insurer never analyzed how long the water had been escaping — the single fact that determined whether the exclusion even applied — and relied on an expert who did not address it.

That connects to a basic principle of California claims handling: an insurer has a duty to investigate a claim thoroughly and fairly before denying it. When a denial rests on an exclusion whose central fact — duration — was never investigated, that gap is evidence both that the exclusion was not proven and that the investigation itself was unreasonable.

What an Insured Facing a Seepage Denial Can Do

If a water claim has been denied under a seepage or “continuous leakage” exclusion, the facts that decide the dispute are usually about timing — and those facts are best captured early:

• Get the plumber’s observations in writing.The plumber who found and repaired the leak is often the best witness on whether the failure was sudden. What failed, how it failed, and any indication of how recently — documented at the time — can be decisive.
• Preserve the failed component.The pipe, fitting, or supply line is physical evidence. Once it is discarded, the carrier’s “it leaked for months” theory becomes harder to test.
• Photograph everything. The water, the affected area, the failed part, and the surrounding materials. Signs of clean, recent water versus long-term staining and deterioration speak directly to duration.
• Ask the carrier what evidence supports the exclusion. Because the insurer bears the burden, an insured may reasonably ask the carrier to identify the evidence showing the leak occurred over weeks, months, or years. A denial that cannot answer that question is vulnerable.
• Read the actual exclusion language. The controlling words are in the policy. Some forms include time qualifiers; the specific wording matters, and an insured is always free to read and rely on their own policy.

Developing this factual record is squarely within a public adjuster’s role. Where a denial turns into a dispute over legal theories or litigation, that is the point to involve a California-licensed attorney.

Related Coverage Doctrines

The seepage exclusion rarely operates alone. Two related doctrines often decide water claims alongside it:

• Efficient proximate cause — when a covered peril sets the chain of events in motion, California law can require coverage even if an excluded peril also contributed.
• The wear-and-tear exclusion — carriers sometimes pair the seepage argument with a claim that the plumbing simply wore out. Like seepage, this exclusion is about cause, and the insurer bears the burden of proving it.
• Water damage claims (general framework) — the umbrella article on how California water-damage claims are handled, including tear-out, slab access, and the broader regulatory framework.

The Bottom Line

The “continuous or repeated seepage” exclusion applies to gradual, long-term water intrusion — not to a sudden burst that happens to involve a pipe. The insurer, not the insured, must prove the water escaped over an extended period, and after Nargizyan v. State Farm, a denial built on an after-the-fact assumption about duration — with no evidence of how long the water was actually leaking — is on weak ground. A water claim denied on this exclusion is worth a careful second look.

Written by Leland Coontz III, Licensed Public Adjuster, CA License #2B53445.