Water and Flood Damage Claims

by John Morgenstern

Just last week I wrote about water damage and mentioned that actual flooding damage won’t be covered unless you have flood insurance. Wow – lots of feedback requesting further information! I hope this helps.

Homeowners and commercial property owners in flood plains are keenly aware of the need to purchase insurance to cover flood-related losses. The federal government, in conjunction with the insurance industry and local communities, formed the National Flood Insurance Program in 1968. This program makes flood coverage available nationwide.

Nearly twenty-five percent of flood insurance claims come from parts of the country that the NFIP considers low to moderate flood risk. NFIP reports that recent year average flood claims have been $24K per household. Often, for homes in moderate to high risk areas, lenders mandate the coverage. Don’t bank on disaster assistance from the feds. The federal government only provides it if the President declares a disaster. And, that assistance is loans, not grants.

To be eligible for flood insurance, you must live in a community that participates in the NFIP. In return, communities implement floodplain management specifications that minimize losses from floods. Use FEMA’s website to determine if your California community participates. The policy is subsidized and administered by the federal government but you purchase it through regular insurance companies.

Costs – Flooding is currently in the news in Minnesota and Wisconsin. A quick check of rates there shows that homeowners in Stillwater, MN (on the WI border and on the scenic St. Croix River) pay over $100 per month for coverage, while a homeowner in Anaheim, CA may only spend $150 per year.

Limitations on coverage are about $500,000 for commercial property and about $350,000 for homes (including damage to contents).

Be cautious. You must know the definition of a flood before you purchase a policy! For example, damage from heavy rains may not qualify. The definition of “flood” used in the coverage 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 the policyholder’s property) from 1) overflow of inland or tidal waters, 2) unusual and rapid accumulation or runoff of surface waters from any source, 3) mudflow or 4) collapse 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.

Myths and Misconceptions abound. For some reason there are lots of misconceptions about flood insurance. The truth is that you can get coverage

1. Nationwide

2. Flood plain or not

3. In spite of the fact that your property may have flooded in the recent past

4. Through your existing Agent/Company (likely)

I hope this helps you understand a little more about water damage from floods. Please visit our Water Damage Insurance Claims page for additional information and resources.

Water Damage Insurance Tips

Be careful how you report water damage to your insurance company. While you must  be truthful, make sure you explain the situation using the most accurate language — or you could find your claim denied.

“The way you initiate your claim may impact the settlement, especially in water damage cases” says John Morgenstern, President of Priority Adjusters.”

“Most people describe a house full of water as “flooded”, right? Well, if it’s not the result of a “flood” you don’t want to use that term with your insurance company! Believe, me!”

A “flood” may not be covered at all, while your damage from a backed-up sewer line or from a burst pipe may be fully covered”. To your insurance company, flooding means that the water came from an overflow of a lake, stream, or river. If it didn’t, don’t even use the word “flood,” says John.

Best advice is to call an adjuster right away to get help filing the claim…and using the terms that are correct to assure your coverage is not limited.