Underwater and Underinsured

Severe overnight storms can turn normally tame creeks and ponds into rushing rivers and lakes. Water and mud can rise over thresholds of people’s homes, filling their basements and causing incredible damages to the structures as well as the contents of their homes.

Don’t live in a flood plain? Doesn’t matter. 30% of flood claims come from properties that are not located in flood zones. Every property has a risk of flooding: this can affect you regardless of whether you live in an area that floods often or not.

The Federal Emergency Management Agency (FEMA) determines the boundaries of flood zones by analyzing the likelihood that an area could experience at least one flood per century—that is, there at least a 1% chance of a flood. If so, that is considered a flood zone. Check out the FEMA Flood Map Service Center to learn about flood zones near you.

Your homeowner’s insurance policy will not cover losses caused by flood damage.

If You Live in a Flood Plain: All mortgages backed by the federal government for properties in high hazard flood zones are required to have flood insurance until the mortgage is paid off. There are some banks that will allow a borrower to decrease their flood insurance coverage as they pay off the mortgage; once the mortgage is paid off, some homeowners elect to waive flood coverage completely. Ultimately, this protects the bank’s investment in the mortgage collateral while allowing the borrower to take on more risk for the portion they own.

Some people choose to take on that risk with the mindset that they can’t remember the last time there was a really bad flood, so they skip the flood insurance and effectively self-insure. That means that from now on, they’ll absorb the full cost of flood damage to their property.

If You Don’t Live in a Flood Plain: Flood insurance premiums can be high if you live in a high hazard flood zone, but that’s not always the case if you don’t. The cost of flood insurance depends on how likely you are to experience a loss caused by a flood. Contact your agent to find out what your flood insurance premium would be.

I Have Water Backup Coverage; will That Cover Flooding, Too? Your water or sewer backup coverage will protect you from water damage caused by pluming failures, sewer backups, and if your sump pump is unable to bail out your house fast enough. Most policies will cover cleanup and provide some money for affected equipment like your furnace, hot water heater, and so on.

Be warned: some insurance companies will only provide their clients with the depreciated value of the equipment affected. The Starr Group does not work with these insurance companies: the companies we work with will provide full replacement coverage to anything that is affected in the loss. If your floor or walls were damaged, they will rebuild the basement; if your couch or television are damaged, they will replace everything that was affected with a new product up to the limit of your coverage.

What Flood Coverage Could Do for You: Your flood coverage will protect you when two or more acres of normally dry land or two or more properties are inundated by water or mudflow. It will cover central air conditioners and furnaces, hot water heaters, washers and dryers, foundation walls, electrical outlets, and your furniture, clothing, and electronic equipment.

However, unlike water backup, the floors and walls are not covered. While a standard flood policy will cover many basement-dwelling appliances, other appliances like portable air conditioners and chest freezers are not covered. If you want to have them covered, you need to extend your flood coverage to include those belongings.