Springtime Flooding, Where Does Coverage Come From?

With spring fighting its way into its rightful place as the ruler of March through June; it is time to discuss flooding and its impact on you (and your insurance coverage). As we all know we had quite a bit of snow this winter, and now all of that snow is melting. That water may find its way into basements and homes which prompt calls regarding the coverage that is provided by the various insurance policies people carry. Below are some things to keep in mind about the limitations of both flood insurance as well as homeowner’s insurance.

Homeowner’s insurance provides very limited coverage in this scenario. Most policies offer $2,500 in coverage for water that backs up into a home from sewers or drains or due to sump pump overflow. If water did not back up from a sewer or drain and there is no sump pump installed then the coverage does not apply. Check with your agent or carrier for exact limits and coverage limitations.

So, since the home policy won’t cover the water, the flood policy (if there is one) must kick in, right? Actually, the answer is no. Flood policies will only cover a loss if you and at least one other abutting property (or two acres of land) must be completely inundated with surface water in order for coverage to apply. If neither of these requirements are met then there is no coverage. Also, coverage for basements is typically limited to the furnace, water heater, etc. Contents and the like are typically not covered unless the first livable area of the home is flooded. Flood insurance is not designed for this type of issue, it is designed for actual flooding of the kind often seen in the Midwest. Flooded basements due to groundwater are not designed to be covered.

People often complain about flood insurance premiums, and after reading the statements above, I am sure it doesn’t help that feeling. The truth is, flood insurance is not competitive and the rates are set by NFIP (National Flood Insurance Program). The rate paid is dependent upon the flood zone the property is located in. If there is a mortgage on the property then flood insurance is required to be purchased, regardless of how exorbitant the premium may be. If flood insurance is needed then consider taking higher deductible in order to help lower the premium. Contact your agent for details on pricing based on property location.