The key insurance test: sudden vs gradual

Insurers (and NZ case law, as summarised by the Insurance Council) treat “sudden” as abrupt—something happening within minutes or hours, rather than days or weeks.​
“Gradual damage” is damage that occurs over days or longer and is commonly excluded, and it’s the damage timeline that matters—not the moment you discovered it.​

A common trap for homeowners

You might “suddenly” find a wet patch or mould in the basement, but if evidence shows the water has been getting in over time, the claim may be declined as gradual damage.

When cover is more likely

You have a better chance of cover when the basement water damage is tied to a sudden, specific insured event (not an underlying long-term issue).​
For example, AMP explains that water damage caused by a storm or flood event may be covered, while water damage caused by gradual wear and tear (like an ongoing leak) generally is not.​

When it’s usually not covered

A lot of “leaky basement” situations look like gradual damage to insurers—especially where the cause is maintenance-related or has been happening repeatedly over time.​
The ICNZ guide includes examples of non-sudden loss insurers don’t consider covered, such as damage due to a leaking shower or blocked gutters that lead to overflow and wall damage—both patterns that mirror the “it’s been happening for ages” problem many homeowners face.​

What about “hidden gradual” cover?

Some NZ policies include a limited extension for certain non-sudden damage, often called “hidden gradual damage”, and the ICNZ guide notes this is commonly capped (for example, $2,000–$10,000) depending on the policy.​
Tower explains that while gradual damage is generally excluded, a “Hidden gradual water damage” benefit may apply for concealed damage caused by leaks/overflows from internal water supply or disposal pipes/hoses, or a water supply tank, subject to conditions and a set limit.​

Why this may not help basement leaks

Many basement leaks are not from internal plumbing; they’re from external groundwater, surface water management, or building envelope/foundation pathways—so they often don’t fit the “hidden gradual water damage from internal services” definition described by insurers.​

What homeowners should do (practical steps)

If you suspect a basement leak and you’re thinking “insurance might cover this,” focus on proving cause and limiting further damage quickly.

1. Photograph and date everything: water lines, damp patches, peeling paint, mould, staining, damaged carpet/linings.​

2. Stop further damage (without hiding evidence): safe temporary measures are fine, but keep records of what you did and when.​

3. Get the right reports: insurers often rely on a plumber/builder report (and sometimes an assessor) to determine if the damage was sudden, gradual, or mixed.​

4. Ask your insurer about your specific wording: the ICNZ guide notes policies may include limited extensions for certain non-sudden damage, but you need to check your policy for what’s actually included.​

5. Don’t delay: “gradual vs sudden” disputes often turn on timelines, and delays can make it harder to show the damage was abrupt rather than ongoing.​

A Plus Waterproofing take: how to reduce risk (and future claim headaches)

Even when insurance doesn’t pay, fixing the cause of a leaky basement is what protects your home’s structure and indoor air quality over the long term.
A Plus Waterproofing regularly sees basement leaks linked to issues like hydrostatic pressure, weak points in the foundation, and inadequate waterproofing—problems that typically get worse if left alone.