Tuesday, May 24, 2016

Flood Insurance? What is it, do you need it?

You own a home, so you buy homeowners insurance.  Standard homeowners insurance policy has water (flood) exclusion.  So you think, I'll buy flood insurance and that will take care of that.  Not so fast, it might not.

Flood insurance only covers for one peril and that is flood (obviously).  But what is considered flood?
Part of flood definition that matters to you is this:
Flood is excess of water on land that is normally dry.  Partial or complete inundation of normally dry land of two or more acres OR two or more properties, one of which is yours.

This means that flood policy will not pay for flood loss unless two or more properties are affected or at least two acres of normally dry land.

BUT, standard homeowners policy has this water exclusion (paraphrasing): any water coming from the outside, whether or not driven by wind.  Well known, straight forward exclusion, (but to be clear standard policy will cover water damage that arises out of leaking roof or broken pipe.)

POSSIBLE GAP:  If you have a situation where only your home or property is affected by unusual excess water /flood, you will not have coverage under your homeowners policy, but you also won't have coverage under your flood policy.
So if you have a lake/pond/brook that might flood your property, there is 100% chance that homeowners policy will not provide coverage and flood policy will kick in only if flooding happens on more than two acres or at least two properties.

Do you need flood insurance?  If your property is in a zone where there is high risk of flooding, mortgagee will require you buy flood insurance and premium will be high.  If you not in a high risk zone, flooding can still happen, but fortunately these zones qualify for preferred rates and in most cases it only costs between $200-$300 a yr, depending on how much coverage you buy.

If you have any questions and wonder whether or not you need flood insurance contact me and we can discuss it in more detail.

Irfan Sehic
Insurance Agent 
Green Insurance Agency 
PO Box 640
Burlington, VT 05402

No comments:

Post a Comment