Does Homeowners Insurance Cover Water Damage?

 

Thoroughly reading through your Greensboro homeowners insurance policy is the best way to learn just what is and what isn't covered in your contract.  It's especially important to understand how water damage is handled, since claims for water damage can often be denied by an insurer due to confusion of what qualifies under a standard policy.

Water Damage Coverage on Your Greensboro Homeowners Insurance Policy

A standard home insurance policy requires that for a claim to qualify for payment, it be a sudden and unexpected loss.  There are additional requirements for a qualified water damage claim.

The source of water damage may be varied.  As a rule, in order to qualify for a claim the water that damages your home must be the result of one of the perils covered by your homeowners policy.  This may include:

• Rain or snowstorm damage
• Plumbing accidents such as burst pipes, accidental overflow of a bathtub, toilet or sink, faulty water-using appliances such as hot water heaters, washing machines or air conditioners
• Frozen plumbing inside the house
• Water damage from fire extinguishment
• Vandalism

From the Top Down, Not the Bottom Up

One way to think about water damage that qualifies for a loss claim is to remember that the damaging water must have never touched the outside ground.  Another way to look at it is that the damaging water must be internal or come from above, never from below.  This qualifies:

• Ground water seepage
• Sewer pipe or water backups
• Flooding

You'll also find that water damage caused by lack of maintenance or neglect will not be covered by your Greensboro homeowners insurance policy.  This means if the pipes in your home freeze and then burst while the home if left unoccupied and the heat was turned off, you won't likely be covered for the loss.

Mold

Mold is insidious and dangerous to your health and often accompanies water damage.  Whether on not your home insurance will cover you for mold removal/remediation costs will be determined by the cause of the water damage preceding the mold development.  If the water damage is covered, the mold removal will likely also be covered.

Flooding

Flood damage can be covered by getting a special flood policy.  Available through your trusted agent or broker, these policies come from a government program called the National Flood Insurance Program (NFIP), which comes under direction of FEMA, the Federal Emergency Management Agency.

Is It Wise to Skip Flood Insurance?

Here's a scary statistic – of all the natural disasters faced by U.S. homeowners, including hurricanes, 90% have involved flooding. This, according to the federal government (FEMA), makes floods the #1 most common natural disaster affecting our nation. And it doesn't take a hurricane to cause flood damage. Just a few inches of water coming into your house can cause significant, costly damage to your home and its contents.

Anytime and Anywhere

While certain areas are more susceptible to flooding than others, it's been shown that floods can occur anywhere and at any time. They can be caused by any number of conditions besides hurricanes, such as a rapid spring thaw, heavy rainfall or the accumulation of water following extinguishment of a wildfire.

Statistically, however, as few as 12% of homeowners carry flood protection. Even in coastal areas, which are most at risk of flooding, the percentage of flood-insured homes is only about 20%. This, in spite of the fact that a standard homeowner's insurance policy typically doesn't cover floods. Flood coverage is only available with a separate, specialized policy written for that specific peril.

Buying A Flood Policy

Though sold and managed through participating private insurance companies, insurance for floods is offered through the National Flood Insurance Program (NFIP), which was created by Congress in 1968 and is overseen by FEMA. To be eligible for this coverage through the NFIP, you must live in a community that participates in the program. See if your North Carolina community participates here.

Even if you reside in a low-risk flood area, you're still financially vulnerable to falling victim to floods. Those living in high-risk areas are likely required by their mortgage lender to carry flood insurance. If your mortgage is federally backed, the coverage is federally mandated.

Even those living in low- or moderate-risk flood areas should seriously consider buying flood insurance. Premiums are lower than in high-risk areas, and, statistically, more than 20% of flood insurance claims come from those with homes in low- to moderate-risk flood areas.

Since the protection is provided by the federal government, premiums within the same risk area don't change from one company to another writing flood coverage. Experts suggest you purchase your flood insurance from the same company that carries your homeowner's insurance. If you have a flood insurance claim, you'll likely have a homeowner's claim also. Dealing with a single agent makes claiming simpler.

Does My Homeowners Insurance Cover Floods?

Some of the most common perils covered by a standard homeowners insurance policy include financial losses resulting from:

• Fire
• Smoke
• Windstorms
• Hail
• Explosions
• Lightning strikes
• Vandalism
• Theft
• Damage from aircraft, cars or other vehicles

Two perils, however, not covered by standard homeowners insurance policies are floods and earthquakes. In order to be covered for financial losses due to either of these two natural disasters, you must have extra, specialized coverage added to your standard homeowners protection. While adding flood insurance is an option for most homeowners to consider, but not required, there are certain homes where the purchase of flood insurance is required.

When is Flood Insurance Required

As a homeowner, you may be required to carry flood insurance if:

1. Your home is in a high-risk flood area and your mortgage is held by a lender that is federally regulated or insured. Even if your home is in a low or moderate-risk flood zone, your mortgage lender may still have a flood insurance requirement.
2. If you have previously received a federal disaster assistance grant from FEMA following a Presidential Disaster Declaration, you'll need to maintain flood insurance in order to qualify for any future federal aid of this type.

Where to Get Flood Insurance

While some independent insurance companies may offer you flood insurance coverage, most homeowners buying flood insurance get it through the National Flood Insurance Program (NFIP), which is overseen by FEMA, the Federal Emergency Management Agency. According to FEMA, floods are the most common natural disaster occurring in the U.S. and more than 20% of the flood claims submitted come from areas that are outside of a high-risk flood zone. They state that no home, no matter where it's located, is totally risk free from being affected by a flood.

While most flood insurance comes through the NFIP, you don't actually buy your coverage from them but through a regular insurance agent or broker. To determine your degree of risk from flooding, you can consult a flood zone map from FEMA. Go here to learn the flood risk for any address in North Carolina.

To Buy or Not To Buy

Flood insurance is a relatively inexpensive add-on to your standard homeowners insurance coverage, particularly if you live in a low-risk or moderate risk flood zone. As little as one inch of flood water in your home can cause as much as $25,000 in damage. Consider the risk.

Does the National Flood Insurance Program Cover Basements?

With so much flooding plaguing our country of late, it's no wonder that more and more homeowners are learning about the importance of flood insurance. Since financial losses resulting from flooding are not covered by standard homeowners insurance policies, it's up to individual homeowners to seek out additional flood insurance coverage to add to their standard homeowner's policy. This can be done through the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Agency (FEMA). Although flood insurance is purchased through the National Flood Insurance Program, it's actually sold through standard insurance company agents or brokers. Some select private insurance companies also offer flood insurance.

What's Covered by Flood Insurance?

Similar to the way standard homeowner's insurance is set up, flood insurance has a coverage component that provides protection for losses sustained to your structure and a separate component that provides protection for loss or damage to your personal possessions. Typically, there's a dollar amount cap of $250,000 for structural damage and $100,000 for your possessions. These two components are purchased separately and each has its own deductible amount. The NFIP recommends purchasing both components.

Flood coverage for your structure includes systems considered essential such as plumbing, electrical, water heaters, heat pumps and furnaces. You should also be covered for permanent carpeting laid over unfinished floors, other carpets over wood floors, window blinds and curtains. Wallboard, paneling, bookcases and cabinets permanently installed are also covered, but if only some cabinets are damaged only those will be replaced.

Personal Property Coverage

Personal possessions such as electronic gear, furniture and clothing are covered if you've purchased the personal possessions insurance component, but not if they're stored in the basement. Valuables such as artwork and furs are covered, but there's a $2,500 cap on these. Moveable appliances such as window-mount A/Cs, microwaves, washers, dryers, refrigerators and freezers (and the food in them) are considered personal possessions.

Basement Exclusions

Flood insurance doesn't cover improvements to your basement such as finished ceilings, floors or walls or any personal possessions found in the basement. Basements are defined as any area in your home that's below ground level. Another exclusion found in flood insurance is any damage caused by the movement of earth, even if that movement is caused by flooding. You should also note that a flood insurance policy typically has a 30-day waiting period before it goes into effect after purchase.