You may be surprised to learn that your definition of a flood and your insurance company's definition may be different. And that difference may determine what type of insurance you need for your home. It could also make the difference between your home sinking or staying afloat if damaged by water.
Imagine this scenario: Pounding spring rains soak through your home's roof and damage your walls and floor. What's even worse, you return to your business after the weekend to find that water accumulated outside the building creating a flood inside. You have flood insurance, so you think the damage to both your home and practice will be covered. But, after a claims adjuster looks at your house and business, he determines that your flood insurance will cover the damage to your business, but not your home because that water damage occurred before any flooding.
Confused? You're not alone. Many homeowners and business owners do not realize that flood insurance and water damage insurance are two different things. Your claim will not be covered if your particular type of insurance does not cover your property damage. It's also important to remember that if you own a home but do not have flood insurance, you will not be compensated by your insurance company for flood damage.
Under the vast majority of homeowner's insurance policies, flood damage is not considered a form of water damage. Since standard homeowner insurance does not cover flooding associated with hurricanes, storms and heavy rains, it's important to have protection from the floods that often accompany these types of disasters and to understand how your insurance company defines a “flood.” Here's basic information about flood insurance and water damage insurance.
The National Flood Insurance Program 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 the policyholder's 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.
Unlike a flood, water damage is typically covered under homeowner insurance, but you should read your policy carefully to determine exactly what kind of water damage the insurer will cover. In general, water damage differs from flood damage in that it occurs before water comes in contact with the ground. For example:
- Severe rainstorms soak through your roof, damaging walls and floors.
- An upstairs pipe bursts and water saturates the ceiling below.
- A toilet overflows soaking your bathroom floorboards.
- A hailstorm breaks your windows and allows water into your home.
Simply put, the main difference between a flood claim and a water damage claim is that flood water comes from a natural source and two or more properties are involved (if you reside in a generally residential versus rural area). If you and your neighbors are all having water issues due to heavy rains and/or rising waters, then you are likely dealing with a flood insurance claim. On the other hand, if you are dealing with water in your house but your neighbor does not have any issues (again, in a residential area), you are most likely dealing with a water damage claim.
Generally, insurance companies cover water damages where the home or business owner could not prevent the hazard. However, you may have trouble convincing an insurance company to cover damage caused by a maintenance problem that they believe should have been repaired—such as a leaky roof that lets in rain, a faulty toilet that overflows frequently, or continuous leaking near a faucet.
The most important thing you can do is to carefully review your insurance policies so that you know precisely what will and will not be covered, preferably before your home or office is damaged by a flood and other types of water damage.
One last word of caution: Do not wait to purchase flood insurance until the weather forecaster predicts historic rainfall or possible flooding—most flood insurance policies require a 30-day wait period before the policy takes effect. When you're standing knee-deep in water inside your home or practice, it's too late.