Hurricane Harvey: Would I be covered in the event of a flood?
Homeowners Insurance vs. Flood Insurance
With the recent catastrophic damage caused by Hurricane Harvey, we thought it was a good time to reiterate why flood insurance is so important, even if you aren’t in a flood prone area. Did you know that the major cause of damage from Harvey was not due to high winds, but rather due to rising waters, storm surge and flooding! More than 52% of homes flooded in Houston were not in a designated flood area. We hope that gives you cause for pause.
So why isn’t flood insurance covered under a standard homeowners policy? Let’s compare the two.
WHAT DOES A STANDARD HOMEOWNERS POLICY COVER?
A standard homeowners insurance policy insures the home itself and the things you keep in it. It is typically a package policy, which means it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. Let’s take a look at each aspect of coverage in more detail:
PART I: PROPERTY PROTECTION
Dwelling: This offers protection as a result of damage to the structure of your home, including fixtures, plumbing and heating, due to a covered loss like fire or hail storm damage. You need enough coverage for the cost of rebuilding or repairing your home, less the cost of the land.
Other structures: This includes coverage for detached structures, such as a garage, garden shed and fixtures attached to land such as a driveway, sidewalks, patio, fence and swimming pool.
Personal property: This covers the contents and personal items in your home such as furniture, clothing and sporting goods. It also extends to your personal belongings anywhere in the world. To determine your property’s value, we’ll provide you with a home inventory checklist to help you quickly and easily itemize your belongings. We recommend insuring your personal property for its replacement cost value. Replacement cost value ensures that you can replace yesterday’s purchases at today’s prices.
Loss of use: In the event that a covered loss forces you from your home, such as because of a fire, loss of use provides coverage to pay for a temporary place to stay while your home is being repaired or rebuilt plus a safety net for additional expenses over and above your normal living expenses while you are unable to live in your home, up to the policy limit.
PART II: LIABILITY PROTECTION
This portion of your policy covers against lawsuits for bodily injury or property damage that you or family members may cause to other people. It pays for both the cost of litigation and any court awards, up to the limit of your policy. It covers you whether you are at home or away.
In the event that a visitor is injured in your home, medical payments coverage allows the person to submit medical bills directly to your insurance company. The benefit is that expenses are paid to the injured person up to the policy limit without a liability claim being filed against you.
SO, WHAT DOES A FLOOD POLICY COVER?
A separate flood policy will cover losses to your property caused by flooding, which provides coverage for things such as:
- Structural damage
- Furnace, water heater and central air-conditioning
- Flood debris clean up
- Electrical and plumbing systems
COST OF FLOOD COVERAGE
As a homeowner, you can insure your home for up to $250,000 and its contents up to $100,000. For this $250,000/$100,000 building and contents coverage, yearly premiums average $405 in low- to moderate-risk areas. If your home is located in a high-risk area, talk to the professionals at Clark-Mortenson Insurance to determine your premium.
While it is up to the property owner to decide if they want to cover the building, if you are a renter, you can cover your belongings up to $100,000.
Just a single inch of water from flooding can cause costly damage to your home, and a standard homeowners policy does not cover damages from flooding. Learn the difference between the two types of insurance below.
Flood insurance will reimburse you for all of your covered losses. As long as your community participates in the National Flood Insurance Program (NFIP), you’re eligible to purchase flood insurance.
In general, a policy does not take effect until 30 days after you purchase flood insurance. However, if your lender requires flood insurance in connection with the making, increasing, extending or renewing of your loan, there is no waiting period.