As the Clean-up Continues

There’s no shortage of news about the recent flood disaster in Indiana. Now, as the waters subside and clean-up continues one of the most talked about subjects may be that of insurance. What is covered in a flood loss? Do I need flood insurance? What does it cost? As professionals, many homeowners may be directing these questions to you.

On June 9, at the request of Governor Daniels, the Department of Insurance re-released a consumer alert about flood insurance. Some of the questions addressed in the alert are reprinted here:

Will my homeowners policy respond to a flood loss?

Generally speaking, a homeowners policy will not cover flood loss. Some companies offer a Hydrostatic Pressure Endorsement to insure your property for the increased exertion of water on the foundation of your structure, a condition frequently accompanying the rising waters of a flood, however, most of these endorsements only cover collapse of the structure due to hydrostatic pressure and do not insure for damage, other than building collapse, due to hydrostatic pressure accompanying the flood.
Some homeowners insurance policies provide coverage caused by the backup of sewers or drains, however, most (but not all) sewer and drain coverage provisions exclude backup as a result of flood and most limit payment for loss from sewer and drain backup to varying amounts usually less than $5,000.
If you insure certain property (examples: antiques, guns, jewelry, camera equipment, objects of art, etc.) under a scheduled property floater (usually an endorsement to your homeowners policy) these specifically listed items may be covered for loss by flood. Please review your policy to make sure.
How is a flood defined for insurance purposes?

A flood is an excess of water (or mud) on land that’s 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 2 or more properties (at least one of which is the policyholder’s property) from overflow of inland or tidal waters; unusual and rapid accumulation of surface waters from any source; mudflow; or collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining, caused by waves or currents of water exceeding anticipated cyclical levels.
What is Flood Insurance?

Flood insurance is a special policy that is federally backed by the NFIP and available for both homeowners and businesses.
You can buy flood insurance for your home or business regardless of whether the property is in or out of a floodplain, as long as the property is located in a participating community. (To find out if your community participates, visit http://www.fema.gov/cis/IN.pdf)
You may buy flood insurance covering up to $250,000 of flood damage to your home. A standard flood policy will cover structural damage, including damage to the furnace, water heater, air conditioner, floor surfaces (carpeting and tile) and debris clean up.
For an additional premium, you also may buy flood coverage for up to $100,000 of damage to the contents of your home.
Coverage is available for up to $500,000 for non–residential buildings and their contents.
For the complete consumer alert, click here.

So, what now? As clients, friends and family all look for help rebuilding their lives, what can you provide? Besides a helping hand, the American Red Cross has a resource called Repairing Your Flooded Home. This book provides tips on everything from getting organized, drying out your home, restoring utilities, rebuilding and preparing for the future.