You were woken up at 12 midnight by the sound of a hailstorm that smashes your windows, followed by a torrential rain that refused to stop. Before you knew it, your home has been covered by damaging water. Will your insurance policy cover this loss? That will depend on the type of insurance you chose to purchase and how the water got into your home.
There are basically two policies that deals with damage to your home due to water – a flood insurance and a homeowners insurance policy. Losses not covered by one of these may be provided for by the other. Planning ahead can help you know the losses to which your home could be exposed in order to decide either to buy one or both of these coverage.
Insurance cover differ in the coverage they provide from one homeowner to another. However, there are basic features common to all. You should talk to your insurance agent about the specifics.
FLOOD WATER INSURANCE
A flood is an excess of water (or mud) on land that is normally dry. The National Flood Insurance Program (NFIP) defines flood to be a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area, or of two or more properties (at least one of which is the policyholder's property) from:
Overflow of inland or tidal waters;
Unusual and rapid accumulation or runoff of surface waters from any source;
Collapse or disappearance of land along the shore of a lake or similar body of water as a result of erosion or underlining, caused by waves or currents of water exceeding anticipated cyclical levels.
Flood Insurance is a special cover that is federally backed by the NFIP and available for homeowners, renters and businesses. A standard policy pays for direct physical damage to your insured property up to the replacement cost or actual cash value (ACV) of actual damages or the policy limit of liability, which is less. Typically, damage caused by water that has been on the ground at some point before damaging your home is considered to be flood damage. A handful of examples of flood damage include:
A nearby river overflows its banks and flows into your home.
A heavy rain seeps into your basement because the soil can not absorb the water quickly enough
A heavy rain or flash flood causes the hill behind your house to collapse into a mudslide that oozes into your home.
Flood damage to your home can be insured only with a flood insurance cover – no other insurance will cover this damage. This type is available through your insurance agent, insurance company or local Federal Emergency Management Office (FEMA). To determine if your home is located in a flood plain, contact your county planning office. If you are living in a flood plain, flood insurance may be an excellent purchase.
A home insurance policy does not provide coverage for flood damage. It provides coverage for many types of water damage to your home. Just the opposite from flood damage, for insurance purposes, water damage is considered to occur when water damages your home before the water comes in contact with the ground. A few examples of water damage include:
A hailstorm that smashes your window, permitting hail and rain free access into your home.
A heavy rain soaks through the roof, allowing water to drip through your attic or ceiling.
A broken water pipe spews water into your home.
Even if flood or water damage is not covered by your homeowners insurance policy, losses from theft, fire or explosion resulting from water damage is covered. For example, if a near creek overflows and floods your home, and looters steal some of your furnishings after you evacuate, the theft would be covered by your homeowners insurance because it is a direct result of the water damage. However, the flood damage would have covered only if you have flood insurance.
Flood Insurance is usually sold and serviced by insurance companies, and backed by the Federal Government. More than 80 insurance companies sell flood insurance. In most cases, the same insurance company that sold your homeowners insurance policy can help you with your flood cover.
It is up to you to talk to your insurance agent about flood and homeowners insurance, and then decide which insurance coverage you need to protect your home, its contents and your family.