Flash Floods, Flimsy Coverage

Pearls in Water

If you own a Ferrari, you can take comfort in the fact that most automobile insurance policies cover flooding if you carry comprehensive limits, even for expensive cars.  But if your Ferrari tastes extend to your home, and you have top-of-the-line construction and luxury furnishings, you may be in for a shocking surprise if your house is flooded.

First, most standard home insurance policies do not cover flood damage to your house or contents.

As more and more people are realizing this gap, they are purchasing separate flood insurance through FEMA’s National Flood Insurance Program.  In general, this is a wise decision and  provides you coverage.  But what kind of coverage—especially if, again, you are living in a luxury home with top-end furnishings and fixtures?

What FEMA Flood Insurance Covers

Flood insurance through the National Flood Program is very basic: In a covered flood, items will be replaced with like kind and quality materials, but not necessarily exactly what you had before.  In some cases the policy will only pay for a depreciated value of the damaged materials. So, say the custom cedar wood siding on your home is damaged by a flood, but it’s 10 years old; the NFIP policy will pay you a depreciated value for that siding, or may offer to replace it with vinyl.

And Forget About Your Basement

In addition, if any contents are below ground, the NFIP flood insurance will not cover them.  And any improvements done in the basement are most likely not covered either—other than basic drywall, studs, and the actual foundation.

Premium Flood Insurance

Are you out of luck? Not necessarily.  Some insurance carriers now offer broad flood coverage that can be added to your home insurance policy for an additional premium.  If you qualify, the coverage will offer replacement cost on contents and building materials and include items anywhere in the house, including the basement.   Discuss your options with your insurance advisor.

Or Take Flooding Precautions

Another option is to manage your flooding exposure by making sure you have taken precautions to minimize the risk of flooding.  That means making sure your home is engineered properly to prevent outside flooding.   Talk to a specialist who can advise you on sump pumps, drains, and outside drainage solutions.

Finally you could also choose to live at the top of a tall mountain, which would also help minimize flooding. But then you have the risk of your Ferrari being buried in an avalanche or your family being carried off by some large wild animal.  We will save that topic for another blog…


About Michael Smerkanich

Michael Smerkanich is a regional executive with the Willis’ Personal Lines practice. Mike has over 25 years of ex…
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