Flood Insurance

What is a Flood?

First let’s start off with the definition of  flood insurance so we know the difference.

According to FEMA:

Flood insurance covers direct physical loss caused by “flood.”
In simple terms, a flood is an excess of water on land that is normally dry.
Here’s the official definition used by the National Flood Insurance Program.
A flood is “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 your property)
from:
  • Overflow of inland or tidal waters;
  • Unusual and rapid accumulation or runoff 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 that result in a flood as defined above.”
*Mudflow is defined as “A river of liquid and flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water…”

But doesn’t my homeowners insurance cover water damage?

Depending on the endorsements on your homeowners insurance policy, it could cover some types of water damage but not “flood damage”  ALL homeowners insurance policies exclude damage caused by flooding!  It states it real clear on your policy that you need to purchase flood insurance if you want to be protected from water that hits the ground first and then damages your house.

What is covered by flood insurance and what is not?

Generally, physical damage to your building or personal property “directly” caused by a flood is covered by your flood insurance policy. For example, damages caused by a sewer backup are covered if the backup is a direct result of flooding. However, if the backup is caused by some other problem, the damages are not covered.

Three things you must know about flood insurance:

  • Coverage for your personal contents must be purchased separately!
  • Flood Insurance pays the replacement cost or actual cash value of actual damages upto the policy limit.
  • Flood Insurance is not a guaranteed replacement cost policy.  If your home is totally destroyed by a flood, the maximum the policy will pay out is the limit purchased which may or may not be enough to rebuild your home.

What is insured under Building Property Coverage?

  • The insured building and its foundation.
  • The electrical and plumbing systems.
  • Central air conditioning equipment, furnaces, and water heaters.
  • Refrigerators, cooking stoves, and built-in appliances such as dishwashers.
  • Permanently installed carpeting over an unfinished floor.
  • Permanently installed paneling, wallboard, bookcases, and cabinets.
  • Window blinds.
  • Detached garages (up to 10 percent of Building Property coverage). Detached buildings (other than garages) require a separate Building Property policy.
  • Debris removal.

What is insured under Personal Property Coverage?

  • Personal belongings such as clothing, furniture, and electronic equipment.
  • Curtains.
  • Portable and window air conditioners.
  • Portable microwave ovens and portable dishwashers.
  • Carpets not included in building coverage (see above).
  • Clothes washers and dryers.
  • Food freezers and the food in them.
  • Certain valuable items such as original artwork and furs (up to $2,500).

What is not insured by either Building Property or Personal Property Coverage?

  • Damage caused by moisture, mildew, or mold that could have been avoided by the property owner.
  • Currency, precious metals, and valuable papers such as stock certificates.
  • Property and belongings outside of a building such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs, and swimming pools.
  • Living expenses such as temporary housing.
  • Financial losses caused by business interruption or loss of use of insured property.
  • Most self-propelled vehicles such as cars, including their parts (see Section IV.5 in your policy).

How Flood Damages Are Valued

Replacement Cost Value (RCV) is the cost to replace that part of a building that is damaged (without depreciation). To be eligible, three conditions must be met:
  1. The building must be a single-family dwelling, and
  2. Be your principal residence, meaning you live there at least 80 percent of the year, and
  3. Your building coverage is at least 80 percent of the full replacement cost of the building, or is the maximum available for the property under the NFIP.

Actual Cash Value (ACV) is Replacement Cost Value at the time of loss, less the value of its physical depreciation.

Some building items such as carpeting are always adjusted on an ACV basis. For example, wall-to-wall carpeting could lose between 10 –14 percent of its value each year, depending on the quality of the carpeting. This depreciation would be factored in the adjustment.

Personal property is always valued at ACV.

As with any insurance policy, consult an independent agent for guidance on how to best protect your family.  For help, or questions call us at 816-254-6100 or toll free 1-888-535-0999

Information taken from FEMA’s National Flood Insurance Program summary of coverage