Did You Know That Your Property Policy Won’t Protect You Against Flood?
Massive waves pummeling homes on the coast, homes floating down raging rivers which, only hours before, had been placid streams. You’ve seen it on the news, and you probably assumed the owners would be protected by their homeowners policy. Unfortunately, the Standard Homeowners or Property Policy excludes damage caused by flood. The insurance industry will not insure any event that might become a massive catastrophe. This has become the job of the government through the National Flood Insurance Program.
Flood extends beyond the obvious. Homes in low lying areas can experience flood damage even if they are not near usual bodies of water. A flash rain storm can gather water and roll down a hill or canyon filling usually dry areas and inundating homes. Just because it hasn’t happened before, doesn’t mean it can’t happen.
And it isn’t just hurricane waves, just a few inches of water can cost thousands of dollars in damage to a home. Flood insurance can help homeowners deal with the financial consequences of flooding, although like other types of insurance policies it doesn’t cover all losses.
You can only purchase flood insurance through an insurance agent; you cannot buy it directly from the National Flood Insurance Program (NFIP). Casswood Agency has worked with coastal flood issues for many years and our staff understands the protection available, rules and the complex jargon.
As with any other type of insurance, it's important to know what your policy does and does not cover. For example, damage caused by a sewer backup is only covered by flood insurance if it's a direct result of flooding; the damage is not covered if the backup is caused by some other problem.
- The insured building and its foundation
- Electrical and plumbing systems
- Central air-conditioning equipment, furnaces, and water heaters
- Refrigerators, cooking stoves, and built-in appliances such as dishwashers
- Permanently installed carpeting over unfinished flooring
- Permanently installed paneling, wallboard, bookcases, and cabinets
- Window blinds
- Detached garages (up to 10 percent of building property coverage; other than garages, detached buildings require a separate building property policy)
- Debris removal
Personal Contents Property
- Personal belongings, such as clothing, furniture, and electronic equipment
- Portable and window air-conditioners
- Portable microwave ovens and portable dishwashers
- Carpets that are not included in building coverage
- Clothing washers and dryers
- Food freezers and the food in them
- Certain valuable items such as original artwork and furs (up to $2,500)
What's Not Covered
- Damage caused by moisture, mildew, or mold that could have been avoided by the property owner
- Currency, precious metals, and valuable papers such as stock certificates
- Property and belongings outside of an insured building, such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs, and swimming pools
- Living expenses, such as temporary housing
- Financial losses caused by business interruption or loss of use of insured property
- Most self-propelled vehicles, such as cars, including their parts (see Section IV.5 in your policy)
Flood Insurance for Basements and Areas below the Lowest Elevated Floor
Coverage is limited in basements regardless of zone or date of construction. It's also limited in areas below the lowest elevated floor, depending on the flood zone and date of construction. These areas include:
- Crawl spaces under an elevated building
- Enclosed areas beneath buildings elevated on full-story foundation walls that are sometimes referred to as "walkout basements"
- Enclosed areas under other types of elevated buildings
Deductibles apply separately to building and contents with different amounts to choose. As with other insurance plans, a higher deductible will lower the premium you pay but will also reduce your claim payment, meaning you will need to cover the difference out of your own pocket. Sometimes a mortgage lender will set a maximum amount for your deductible.
Homes and businesses in high-risk flood areas with mortgages from federally regulated or insured lenders are required to have flood insurance. While flood insurance is not federally required if you live in a moderate- to low-risk flood area, your lender may still require you to have insurance.
Rates do not differ from company to company or agent to agent. The rates depend on several factors, including the date and type of construction of your home, along with your area's level of risk. Most premiums include a Federal Policy Fee, a fee to help defray any increased cost of compliance with higher standards after a flood, and a Homeowner Flood Insurance Affordability Act of 2014 Surcharge. If your community participates in the Community Rating System (CRS), you may qualify for an insurance premium discount. The discount is calculated based on the community's efforts to reduce the risk of flooding.
- If a building is newly designated in the high-risk Special Flood Hazard Area (SFHA) and you purchase flood insurance within the 13-month period following a map revision, there is a 1-day waiting period.
- If you purchase flood insurance in connection with making, increasing, extending, or renewing your mortgage loan, there is no waiting period.
- If you select additional insurance as an option on your insurance policy renewal bill, there is no waiting period.
- If a property is affected by flooding on burned Federal land and the policy is purchased within 60 days of the fire-containment date, there may be no waiting period. Waiving of the waiting period is determined at the time of claim.