During a recent rain storm in New York, some portions of Suffolk County received up to 13 inches in a very short time when a weather system stalled. The results: road closures, sink holes, flooded businesses, basements and cars.
How can insurance policies be expected to respond to such damages?
Comprehensively, a physical damage coverage can provide some relief if your vehicle is damaged by flood. However, there are limitations depending on the type of coverage purchased, the proximate cause of a loss, and the steps you take to safeguard the vehicle afterwards.
Usually for property and business owners flood coverage is not provided under Homeowner’s, Businessowner’s or Package policies. Should Flood coverage be included, it is usually for limited amounts or in the form of a Water Back Up Endorsement.
FLOOD INSURANCE-Your best form of protection:
Flood insurance is the best safeguard against damages and destruction caused by:
- overflow of navigable waters
- mud slides
- unusual and rapid accumulation of surface water
- runoff water
- collapse and subsidence caused by erosion
- Super Storms such as “Sandy”
As with any exposure to loss, we strongly urge you to discuss your concerns with your agent or broker before something happens and find out the best way to protect your assets and your family.
By: Karen Skoler, CPCU
With our history of floods in this country you would be shocked at the number of people who just don’t think that they need to purchase flood insurance. Some of the reasons they give are:
• I live in a low risk flood zone;
• We have never had a flood in my neighborhood;
• I only insure against what is likely to happen;
The truth, however, is that anyone can be at risk for a flood. You don’t have to live in a high risk area to have a claim and the National Flood Program says that people outside of what is deemed to be a high risk area account for 25% of all claims and 33.3% of all disaster assistance. In addition, let’s keep in mind that disaster assistance is a loan and loans have to be paid back to the provider with interest!
Also, some causes of flood are the result of poor drainage systems, rapid accumulation of rain, melting snow, broken water mains, not just over flow of bodies of water, as commonly believed. For properties built on hillsides there is always the danger of mudflows which can also damage property. Did you know that mudflow is covered under the Standard Flood insurance policy?
Many people get so annoyed when they go to buy a piece of property in a high hazard area and the mortgage company requires that they provide a flood policy. What they don’t realize is that statistics concur that during a 30 year mortgage, there is a 25% chance that an insured will sustain a loss from flooding. Since banks and mortgage companies aren’t charitable institutions, and want to maintain their backing as federally regulated lenders, they will always err on the side of caution. Even in moderate to low risk areas, the flood insurance may not be mandatory, however a lender can still require that it be purchased. And should the maps be revised during the life of the loan and your property is now in a high risk area all bets are off. You will be getting notice that you must now purchase flood insurance or risk having the mortgagee purchase forced coverage for you at a much higher price. And, there have been instances where the loan was actually called in.
So all in all, it certainly makes sense to me that before saying “no” to a Flood policy, suggest that you say “yes” to investigating the actual risk to you and your family. Your first step is to call your insurance agent today.
Karen Skoler, CPCU
While watching television this weekend, I saw many advertisements for the movie “Noah” opening March 28, at my local theater. The essence of the film is that Russell Crowe is charged with the task of building the ark to save the salvageable from destruction. We could have used Mr. Crowe as well as the ark during Katrina, Super Storm Sandy and the snow of this past winter in addition to some other recent events in our history.
After Super Storm Sandy many people got a rude awakening when they learned that traditional insurance policies don’t include coverage for Flood. This prompted many insurance agents to advise their customers, in writing once again, that the policy(ies) they currently have don’t protect them in case of a flood. Even so called “ALL RISK” or “ Special Form” policies don’t cover Flood unless it is specifically added at the time the policy is written. So what is a person to do?
In the case of a homeowner or a business owner, it is important to know that if your home or business is flooded, federal disaster assistance (FEMA) will no longer reimburse you for your damages. The best they can do is to offer you a low interest loan to help cover repairs from flood damages. And these loans are only available if the president of the U.S. formally declares a disaster, and you must pay back this loan along with any existing mortgage obligation you already have.
What about tenants? If you live or work in a community that participates in the National Flood Insurance Program, you qualify to get flood insurance to cover the contents of your home or the contents of your business in case of a flood. Now that can be a huge help!
Since you can no longer count on federal disaster assistance, calling your agent now to purchase flood insurance is the only option that makes sense. Either that or start building the ark!
– Karen Skoler, CPCU
Dear Sherri, My husband has a “Man-Cave” in our basement. If our basement should flood, are his toys covered by our flood policy? – Signed Husbandless in NYC
Dear Husbandless in NYC, Unfortunately, no. Most flood policies have very limited coverage for personal contents in a basement. They only cover items meant for a basement, such as water heaters, laundry equipment, etc. A 70-inch home theater doesn’t qualify. However, on the positive side, if you have a flood, you’ll get your husband back! Or is that another negative? Anyway, keep in mind that a homeowner’s policy also excludes flood, so there would be no coverage there as well. The point is, keep those man-caves above ground if you want insurance protection. – Sherri
Q: Dear Sherri, A pipe im my upstairs bathroom wall is leaking and has flooded my first floor living room and kitchen. Do I have coverage on my homeowner’s policy or do I need a flood policy?
A: Dear Swimming in Queens, Great question and one that I am often asked. Technically, what you had was NOT a flood. Therefore, your Homeowner’s policy will cover this loss as this loss would be considered “water damage.” What’s the difference? A flood is defined as “rising and overflowing body of water.” If your toilet becomes an overflowing body of water, I suggest the culprit visit a doctor. Anyway, here are a few examples of flood damage and water damage:
A broken water pipe floods your home.
A heavy rain soaks through the roof allowing water to damage your attic, ceiling, ect.
A nearby river, bay, ocean or even a stream overflows
Due to heavy rain the soil can’t absorb the water quickly enough
The city’s water mains burst on your street
So if you ever have any type of water damaging your home, call your agent to find out if it is “water damage or a “flood”. Better yet, just get flood insurance and be protected either way. Wishing you and your home stays nice and dry.
First, congratulations for making the wise decision to have a flood policy. Second, most flood policies have only limited contents coverage in the basement. Flood policies usually only cover items meant for a basement. Now-a-days we have everything from game rooms to home theaters to wine cellars that would be the envy of the Queen of England down there. However, flood policies only cover basement items such as:
– Air Conditioning units-portable or window type
– Clothes washers and dryers
– Food Freezers other than walk-in and the food in the freezer
There you have it, very limited coverage. Already have a home theater in the basement and not sure what to do? May I recommend a dike and a windmill? Seriously though, you can’t get flood protection for these kinds of items in the basement. Therefore, this is something you should seriously consider before finishing a basement, talk to your agent first to see if it is possible to get coverage for what you are planning to do.