A filter assembly and a method of operating the same to detect water leaks are provided. The filter assembly includes a filter housing for receiving a filter cartridge and at least partially defining a drain trough positioned below the filter cartridge for collecting leaked water. A light source is positioned proximate the drain trough for directing light through the drain trough and a light sensor is positioned proximate the drain trough for sensing the light directed through the drain trough. A controller uses the light sensor to monitor the light generated by the light source and determines that a leak exists when an intensity of sensed light is reduced by the leaked water.