First thing this morning I got a call from a contractor who was drying out someone’s home. He had an unusual situation he was dealing with, so he called to see if I could answer some question he and the homeowner were wondering about.
As is true for much of the Southeast, and other parts of the country as well, we have been experiencing afternoon thunderstorms just about every day this week. Yesterday’s deluge was especially heavy, as evidenced by the semi-pro baseball game I took my son to but got rained out before even starting, and the news reports of localized flooding. The lightning show was also quite spectacular.
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In any event, the contractor explained he had been inundated lately with cases he described as“floods”, and today he was dealing with a homeowner who had water in at least 4 rooms, ruining carpet, baseboards, drywall, and any contents that happened to be on the floor. The water came in under a door when their atrium took on more rainwater than could be drained off (as it typically does during heavy rain). So the question was, “is this water damage covered by the homeowner’s insurance policy, or by a flood insurance policy?”
The immediate answer, as is often the case, was, “that depends”. I realize people are not fond of that response, and it sounds like I am trying to avoid giving a definitive answer, but especially when it comes to insurance, there are often more questions that need to be asked before an answer can be given with any degree of certainty.
One of my questions was “what did the insurance company say?” I’ll admit this question was more a question of curiosity, since my answer is never based on what an insurance company says, and just as I would expect, the answer from the insurance company was, “you’ll need to wait for the adjuster to come out and make a determination.” And while that doesn’t sound like a good answer, as we’ll see later, it really is the proper response.
Odds are even when the adjuster comes out, an answer will still not be available, as adjusters today are rarely able to make such coverage decisions in the field, as they did in previous decades. I would think as technology improves the speed of communication and research, such decisions would be easier to make on the scene, but the reality is that adjusters today are usually relegated to asking questions, taking photos and measurements, and then relying on a claim examiner in an office somewhere (who often has little to no field experience handling claims) to make the final decision.
After asking the contractor a few more questions, I learned the atrium was an exterior atrium, created by 3 walls that were at ground level. I also learned the area of water that rose high enough to enter the home was not very large, consisting mainly of the area of the atrium itself. In other words, the “puddle” did not extend to any fence or neighbor’s property line, and was much less than 2 acres in size (we’ll see why this was important shortly).
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Armed with this information, I was able to answer with a high degree of certainty, which of the homeowner’s policies (home, or flood) would cover this event, even without having to read either policy, and here’s why: homeowner’s insurance policies generally do not cover for rain water which collects on the ground and enters the home (they call this “surface water” or “flood”); and flood insurance only covers for events specifically defined as “flood.”
According to FloodSmart.gov, a “flood”, in simple terms, is “an excess of water on land that is normally dry.” The official definition used by the National Flood Insurance Program (NFIP) 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 your 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.”
*Mudflow is defined as “A river of liquid flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water. Other earth movements such as landslide, slope failure, or a saturated soil mass moving by liquidity down a slope, are not mudflows.”
So basically, if it rains a whole bunch, but the water that accumulates into an ever-increasing puddle does not reach the neighboring property, and does not exceed 2 acres, it is not covered under the flood policy, as in the case of my friend the contractor’s new customer.
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Therefore, the answer to the question “is the water damage covered by homeowners or flood insurance?”, in this case is, “probably neither.” Why? Because surface water is excluded by the homeowners policy, and the event did not meet the definition of “flood” in the flood policy. The insurance company should have known that in the few minutes it took for me to make that determination, but before they can deny a claim officially, they are obligated to fully investigate the facts of the claim, and document for their own records whether or not it should be covered, in the event the homeowner does not accept their conclusion and hires an attorney to fight them on it. And as explained to the contractor, my answer was based on the information given to me at the time, and if the homeowner wanted, I would be happy to fully investigate the facts and compare my findings to those of the insurance company.
One more thing about this particular example is that this homeowner did not have flood insurance. Like most people who do not live in a designated flood zone, if their mortgage company does not require them to carry flood insurance, or if they don’t have a mortgage, they simply don’t get a flood policy. In this case, it probably would not have mattered anyway, I don’t believe it would be covered by the flood insurance policy based on the facts provided, but it highlights a problem we see on a regular basis – people often don’t consider flood insurance until after it’s too late. Even though most insurance companies provide bold warnings that flood is not covered under the homeowners policy, and even with all the commercials FEMA puts on TV advising people to get flood insurance, if it is not required, many people simply don’t get it. Perhaps they think if they really needed it, someone would make them buy it.
But as noted by FloodSmart.gov, “people outside of mapped high-risk flood areas file over 20-percent of all National Flood Insurance Program flood insurance claims and receive one-third of Federal Disaster Assistance for flooding.”
The bottom line is don’t wait for Noah to sound the alarm, or for you find out first-hand what flood insurance is all about before talking to your agent about flood insurance. It may be a good idea even if you are not in a flood zone, and it should be less expensive there as well.
Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.