By Gabe Wooldridge
Express Solutions Producer and Private Client Consultant
Spring showers are around the corner and this brings the potential for increased water exposure to many property owners. Water damage may wreak havoc on your home and possessions and it can occur when you least expect! There are three major aspects of the dreaded words WATER CLAIM and how it is or isn’t covered under your homeowner’s policy. This section will review flood and how insurance companies review this peril.
Many homeowners could be potentially impacted by flooding. The trends of sudden large storms in the US are more frequent now than in the last 105 years since they began recording storms — just look at the situation in California. Per the EPA statistics, “In recent years, a larger percentage of precipitation has come in the form of intense single-day. Nine of the top 10 extreme one-day precipitation events have occurred since 1990.” The intense increase in the amount of water in a short span of time is what causes many flash floods.
Unfortunately, MOST homeowners do not carry flood insurance even in regions in which floods are more prevalent. For example in Louisiana, 80% of the residents that had flood damage this August did not have flood Insurance! This is possibly one of the largest gaps and misunderstood aspects of property exposures. To put it simply, flood coverage is defined as water entering your home from outside of the home. The bad news is if water enters your home from the outside and causes damage and you do not have a separate flood policy there is NO coverage from your homeowners insurance.
The good news is that the United States government saw the extensive damage floods were causing Americans and created a flood program called National Flood Insurance Program (NFIP) that provides coverage for your home, as long as you purchase the policy through NFIP. They have allowed insurance companies to write this coverage, which is a separate policy, and is backed by the US Government and which pays out from a pool of money from all the people who purchase the coverage.
Agents can quote flood insurance for property owners — the maximum coverage is $250,000 property damage and
$100,000 contents damage. There is a 30 day waiting period for flood coverage to go into effect – so if the weatherman is saying Hurricane Zane is coming you cannot immediately place coverage. Companies will suspend allowing new coverage when a flooding event is in the forecast or underway. Additionally, if you have a home with higher property value of coverage than the FEMA maximum of $250,000, there are ways to increase the coverage. Insureds may be able purchase excess flood coverage from your insurance company to provide an adequate amount of coverage to make you whole in a loss. This additional coverage is labelled “excess flood coverage.”
It’s important to understand the risk of how floods can potentially impact your home. Ask your agent if you currently have flood insurance and what the cost would be to add this coverage to your insurance account. Weather patterns may be changing or cycling. However, having the correct coverage to make you whole after a flood event could keep your head above water financially.