Flooding Can Occur Anywhere – Are you Prepared?

During Hurricane Sandy, over 1.58 million claims were filed to cover the costs of damage to homes, commercial businesses, and other property.

1.58 million is hard to picture, so let’s just take a step back and realize that the number of people who were affected by this hurricane is more than the entire population of the state of Idaho.

The total losses added up to over $18,750,000,000 – nearly $19 BILLION dollars.

And these are just the numbers from the people who had coverage.

Many more people were affected by Hurricane Sandy. You may even know some of them. Many people weren’t included in these numbers because they didn’t file claims.

They couldn’t. They didn’t have insurance that would cover the costs of flooding.

Instead, they had to pay for the damage done to their property out-of-pocket.

Those who were affected here in New York and New Jersey by Hurricanes Sandy and Irene can tell you that waiting until after the disaster has struck is definitely not the way to go. Even if your area has never been affected by flood conditions, you don’t want to be caught flat-footed.

Considering the low cost of flood insurance, it’s not a risk worth taking. Here’s what you need to know about flood coverage:

What Is Flooding?

Flooding is defined as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land or two or more properties (at least one of which, obviously, must be your own). The flooding can occur from overflow of a body of water, unusual or rapid accumulation or runoff from any source, mudflow, or the collapse of land along the shore of a lake or other body of water as the result of water-related erosion.

In layman’s terms? Hurricane, unprecedented rainfall, or simply an unusual amount of winter runoff can cause flooding as it is defined. Some areas are more prone to flooding than others – if you live near a river or along a body of water, or are in an area that is frequently subject to hurricanes, you are likely in a Flood Hazard Area.

These buildings have a 26% of suffering flood damage over a 30-year period (by comparison, the chance of fire damage – which is on average the highest risk you face as a property owner – is only 9%). Unfortunately, only about 1 in 4 buildings in a Flood Hazard Area are covered by flood insurance.

What Is Covered In Flood Insurance?

This depends on whether you own a commercial building, a condo, or a residential property. One of the most important distinctions is that single-family dwellings and residential condominiums are eligible for replacement cost coverage to replace the part of the building that is damaged without depreciation. Commercial buildings must seek out additional coverages for flood losses from a private insurance company if they are worried about costs of business interruption, extra expenses, or additional living expenses (as might apply if you own an apartment complex).

You should consult your insurance agent to be sure you have the coverage you need, but in general, building coverage for all types of buildings includes:

  • Fixtures, machinery and equipment within the building (NOT outside the enclosed building, even if it is still on the property – this includes vehicles and their contents)
  • Specific property items like awnings, canopies, fire sprinkler systems, and ventilating equipment

Personal property coverage includes similar restrictions on where the property can be located. There is no flood coverage for property outside the insured building. Inside the building, personal property coverage includes:

  • Kitchen appliances, air conditioners, carpeting and flooring, outdoor equipment and furniture stored inside the insured building, and a limited, set amount collectively covering artwork, rare books, jewelry, watches, and furs. (If you have many valuable items of this type, it is best to have them insured individually.) Antiques, similarly, are paid based on their functional value only, and so items of great value should be insured separately.

And then there are basements.

Regarding Basements

Basements have their own rules about what can and cannot be covered in flood insurance, and the definition of “basement” isn’t as simple as you might expect, which can either work to your benefit or your detriment, depending on the type of building you own.

A “basement” is defined as an area of the building that has a floor that is below ground level on all sides. Many garden-level apartments can technically be considered basements by this definition, which can leave residents very vulnerable to property damage in a flooding situation. A lower-level apartment is not considered a basement if it has a walk-out door that opens onto dry land where the ground is lower than the finished floor of the subgrade room.

So, for example, a house that has been built into a hillside might have an apartment that is below ground on three sides, but have a door that opens out onto a sloping hillside that is below the floor level of the apartment. This would not be considered a basement. However, a similar apartment whose door opens out onto a set of stairs that must be climbed to exit would be considered a basement.

Property Covered By Flood Insurance in a Basement:

  • Unpainted drywall and ceilings
  • Backed-up sewer lines and damaged sump pumps
  • Damaged well water tanks and pumps
  • Fuel tanks and the fuel in them
  • Cisterns and the water in them
  • Damaged solar energy pumps and/or tanks
  • Central air conditioners
  • Non-flammable insulation
  • Furnaces and water heaters
  • Clothes washers and dryers
  • Food freezers and the food in them
  • Damaged heat pumps
  • Electrical junction and circuit breaker boxes
  • Stairways and staircases attached to the building that are not separated by elevated walkways
  • Elevators, dumbwaiters and relevant equipment (with exceptions)
  • Clean-up costs

All other property not on this list is not covered, including personal property, finished walls, floors and ceilings, doors and cabinets, and stoves and dishwashers. All of these are particularly relevant if the room or rooms technically defined as a “basement” are being used as a garden-level apartment. If this is the case, you will want to seek additional coverage.

Debris Removal and Compliance Coverage

You may have to remove debris off your property, either because the damage has caused a large amount of debris on the premises or because the flood has brought debris onto your property. Your coverage should pay for debris removal as well as compliance coverage – which is any repair or reconstruction required by the state or local authorities in the wake of a flood.

For example, after Katrina, many residents were asked to comply with new restrictions on elevation, flood proofing, relocation, and even demolition. Existing ordinances and laws in which you were not in compliance before the flooding occurred are, for obvious reasons, not covered.

When You Need It

Most people don’t think they need flood insurance, which explains why so many are caught unawares when they experience torrential rainfall or another unexpected catastrophe and find half of their property submerged in water. Hopefully we’ve explained the risks and benefits sufficiently here to convince you that this is a very necessary – and quite inexpensive – coverage that could save you a great deal of money if and when you need it.