How to be in­formed and in­sured in light of flood­ing and wa­ter dam­age

The Avenue News - - EDITORIAL -

By: JOY HATCHETTE, AS­SO­CIATE COM­MIS­SIONER OF CON­SUMER ED­U­CA­TION & AD­VO­CACY FOR THE MARY­LAND IN­SUR­ANCE AD­MIN­IS­TRA­TION

Home­own­ers poli­cies do not cover all types of wa­ter dam­age. While the terms of your pol­icy will de­ter­mine what types of wa­ter dam­age are cov­ered and the amount of cov­er­age avail­able, gen­er­ally home­own­ers poli­cies do not cover flood­ing. The Stan­dard Flood In­sur­ance Pol­icy, avail­able for pur­chase from the Na­tional Flood In­sur­ance Pro­gram (“NFIP”), de­fines “flood” as:

• 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 (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 . . .”); 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.

If wa­ter en­ters your home in one of these ways and causes dam­age, this would be con­sid­ered a flood and your home­own­ers pol­icy would NOT pay for that dam­age; in­stead, you would need to have a flood in­sur­ance pol­icy.

But if the wa­ter seep­age is not the re­sult of a flood, you will not have cov­er­age un­der your flood pol­icy. For ex­am­ple, if sur­face wa­ter or sub-sur­face wa­ter seeps into your base­ment through a foun­da­tion wall or floor, a flood pol­icy will not cover the dam­ages. Gen­er­ally, you will NOT be cov­ered for the re­sult­ing dam­ages un­der your home­own­ers pol­icy ei­ther. Prob­lems from seep­age are con­sid­ered main­te­nance is­sues and are gen­er­ally not cov­ered by in­sur­ance.

On the other hand, if wa­ter over­flows a sump pump or sewage en­ters your home through pipes or drains de­signed to carry it away, your home­own­ers in­sur­ance may pro­vide cov­er­age if you have pur­chased a wa­ter/ sewer back-up en­dorse­ment from your in­sur­ance com­pany. If you have this cov­er­age, most poli­cies will pay for the dam­age done by the wa­ter or sewage that backs up into your home; how­ever, most poli­cies will not cover the cost to re­pair or re­place the pipe or drain. While the scope and amount of cov­er­age will be es­tab­lished by your home­own­ers pol­icy, Mary­land law re­quires that your in­sur­ance com­pany of­fer you this type of cov­er­age and most com­pa­nies of­fer sev­eral dif­fer­ent cov­er­age limit op­tions.

Fi­nally, if a pipe in your home sud­denly bursts and wa­ter flows all over the floors, gen­er­ally a home­own­ers pol­icy will cover the dam­age caused by the wa­ter. How­ever, gen­er­ally re­pair or re­place­ment of the pipe is not cov­ered. You should check the terms of your pol­icy to learn more about the scope and amount of cov­er­age your spe­cific pol­icy pro­vides. Should I con­sider buy­ing flood in­sur­ance?

If your home or busi­ness could be dam­aged by ris­ing wa­ter, you should con­sider buy­ing flood in­sur­ance. Even if you are not in a flood zone, you may be at risk for flood­ing. Talk to a trusted in­sur­ance ad­vi­sor about your op­tions. Flood­ing is the na­tion’s most com­mon and costly nat­u­ral dis­as­ter. It causes bil­lions of dol­lars in dam­age each year. Floods can hap­pen any­where. More than 20% of flood claims come from prop­er­ties out­side of the high-risk flood zone. You should at least in­ves­ti­gate and make an in­formed de­ci­sion. Who Can Pur­chase Flood In­sur­ance?

Flood cov­er­age is avail­able for any build­ing lo­cated in a com­mu­nity that has qual­i­fied for the Na­tional Flood In­sur­ance Pro­gram (NFIP). This means that build­ings do not have to be lo­cated in a flood­plain to be el­i­gi­ble for cov­er­age. Nor do you need to be lo­cated near a body of wa­ter to be at risk for flood dam­age. Floods are of­ten caused by storms, melt­ing snow, hur­ri­canes, heavy rain, dam fail­ures or other causes. Can Busi­nesses and Ren­ters Pur­chase Flood In­sur­ance?

Yes, home­own­ers, con­do­minium own­ers, ren­ters and busi­ness own­ers can all pur­chase flood in­sur­ance. What does flood in­sur­ance cover?

Your pol­icy terms will dic­tate what is cov­ered should you in­cur dam­age from a flood. Typ­i­cally it cov­ers dam­age caused by a gen­eral and tem­po­rary con­di­tion of par­tial or com­plete in­un­da­tion of two or more acres of nor­mally dry land or of two or more prop­er­ties from the 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.

There are two types of cov­er­age avail­able un­der the Na­tional Flood In­sur­ance Pro­gram: struc­tural cov­er­age for walls, floors, in­su­la­tion, fur­nace and items that are at­tached per­ma­nently to the in­sured struc­ture and con­tents cov­er­age for your per­sonal prop­erty. These cov­er­ages are pur­chased sep­a­rately and carry sep­a­rate de­ductibles.

Homes can be in­sured up to $250,000; fur­nish­ings and con­tents cov­er­age is avail­able up to $100,000. Com­mer­cial prop­erty lim­its are $500,000 on the build­ing and $500,000 on con­tents. Is Wind-Driven Rain Con­sid­ered Flood­ing?

No. Rain en­ter­ing through wind-dam­aged win­dows, doors or a hole in a wall or roof that re­sults in stand­ing wa­ter or pud­dles is con­sid­ered wind­storm dam­age, not flood dam­age. The NFIP only cov­ers dam­age caused by a gen­eral con­di­tion of flood­ing (de­fined as a gen­eral and tem­po­rary con­di­tion dur­ing which the sur­face of nor­mally dry land is par­tially or com­pletely in­un­dated). Flood­ing typ­i­cally is caused by storm surge, wave wash, tidal waves or the over­flow of any body of wa­ter over nor­mally dry land ar­eas. Build­ings that sus­tain this type of dam­age usu­ally have a high-wa­ter mark show­ing how high the wa­ter rose be­fore it sub­sided. Although the Stan­dard Flood In­sur­ance Pol­icy (SFIP) specif­i­cally ex­cludes wind and hail dam­age, many home­own­ers poli­cies pro­vide cov­er­age for this type of dam­age. Check your pol­icy to see if this is in­cluded. Does a Flood Pol­icy Cover My Base­ment?

While flood in­sur­ance does not cover base­ment im­prove­ments such as fin­ished walls, floors, or ceil­ings, or per­sonal be­long­ings kept in a base­ment, it does cover struc­tural el­e­ments, es­sen­tial equip­ment, and other ba­sic items nor­mally lo­cated in a base­ment. (For ex­am­ple unim­proved struc­tural parts such as walls, foun­da­tion and util­ity con­nec­tions are cov­ered.) Cov­er­age usu­ally ap­plies to sump pumps, wa­ter tanks, fur­naces, air con­di­tion­ers and clean-up as part of the struc­tural cov­er­age. Fin­ished por­tions of a base­ment, by law, are not cov­ered.

The NFIP gen­er­ally de­fines a base­ment as any area of a build­ing with a floor that is be­low ground level on all sides. Is Flood In­sur­ance Ver y Ex­pen­sive?

The amount you will pay for flood in­sur­ance will de­pend on your risk. If your home or busi­ness is in a high-risk area, you will pay more than some­one that is in a mod­er­ate to low-risk area. Talk to your com­mu­nity’s flood­plain man­ager to find out your prop­erty’s level of risk. In ad­di­tion, your pre­mi­ums are based on the el­e­va­tion of the struc­ture as well as the de­ductible you select. How Do I Pur­chase Flood In­sur­ance?

Start by talk­ing with your trusted in­sur­ance ad­vi­sor. If your agent does not sell flood in­sur­ance, you can find an agent by con­tact­ing the Na­tional Flood In­sur­ance Pro­gram (NFIP), https://www.flood­s­mart.gov/. How Long Will it Take for My Pol­icy to be Ef­fec­tive?

Nor­mally there is a 30-day wait­ing pe­riod for the pol­icy to be ef­fec­tive. There is an ex­cep­tion if the pur­chase of flood in­sur­ance is in con­nec­tion with ex­tend­ing or re­new­ing a mort­gage loan.

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