An insurance policy is a blessing when you find your claim for damage is covered. The nature of the business started off as an excellent way for a collective group to participate in the pool from which recovery funds are paid. A loss that an individual cannot sustain alone is easily managed using the law of large numbers.
This is the concept behind certain decisions such as whether an insurance company offers certain coverages as well as when and why certain claims are denied. A perfect example of these distinctions can be played out in the difference between what is considered water damage and the purpose of flood insurance.
Homeowners typically carry insurance to protect the home from damages due to wind, hail, theft, vandalism and most policies will have some kind of water coverage. It is important to understand what kind of water coverage you have, if any, on your policy. Typical water coverage on your home policy will cover sudden and accidental water damage, but flood coverage is a totally separate policy and coverage.
What Constitutes Water Damage Coverage?
Revisiting the concept of insurance, protection against water damage is commonly part of the package. The house is most often constructed with water pipes running through the walls, ceiling, and attic spaces. The roof of the house is heavily relied upon to protect the building envelope from water damage. Heavy storms that produce hail can break windows letting rainwater inside.
Appliances and facilities such as the kitchen, bathrooms and laundry room present an obvious potential for water damage. Homes that enjoy large fish aquariums may find at some point that carpets can be saturated if that tank is breached.
While it is reasonable to think that these and other possible scenarios are covered under the homeowner’s insurance policy, it is always best to discuss these concerns ahead of time with the insurance agent or broker.
One key distinction with water damage coverage is to determine what caused the damage and how it happened. There is also an expectation that the homeowner can take certain precautions or steps to mitigate the potential for loss.
In other words, insurance companies are prepared to cover water damage when it’s caused by wind or hail, or by sudden and accidental water(if coverage is included or purchased).
How is Flood Damage Defined?
Flood insurance is on another level as it tends to involve more than a single insured dwelling. It is separate from homeowner’s insurance, and it is not a covered loss simply because you have a homeowner’s policy in effect.
Flood damage is the result of flooding events or flash floods typically referred to as rising water. Heavy rainfall occurring within a short window of time or when a nearby basin overflows or where an improper slope allows stormwater runoff to flow directly around the home are all further examples of flood damage.
Flood damage may also be sustained when inland waterways, rivers or lakes crest their embankments. Hurricanes and tidal waves certainly can cause flooding as can mudflows or landslides. A sudden melting of ice or accumulated snow is also a potential flooding event. The distinctions between water damage and flood damage can be quite nuanced. Homeowners should pay attention to the clauses or exclusions that are a part of any flood policy.
Greater Risk Always Undergoes Greater Scrutiny
Therefore, there is a National Flood Insurance Program (NFIP) to help spread out the exposure. It may be possible to find private insurers offering flood insurance policies. It is a matter of shopping for the best coverage at the price you can afford.
It is not unusual for insurers to seek ways to spread out their exposure. We see this with accommodated risk policies or other potentially catastrophic losses where the exposure is magnified due to the number of homes in each area. That way people are still able to have individual coverage even though the risk is significant for the insurer.
Since flood damage is so much more extensive than what is viewed as water damage, it covers such things as the foundation of the house, the floors, carpeting, walls, paneling, electrical and plumbing systems as well as appliances. Flood insurance does not account for damage occurring outside of the building though.
Therefore, a detached garage or outbuilding, a swimming pool or landscaping are not covered by flood insurance. It is important to know that moisture damage determined to have existed before a flood will be declined if it can be determined that the homeowner could have prevented it.
You should know that even a denied claim can have a negative bearing upon an insured. Where there is an expectation of the insured doing their part in the effort to mitigate losses, denied claims remain part of the record and may impact the premiums on future insurance policies going forward. However, this should not impact your decision to file a claim if you are confident that the damage sustained is a covered loss under your policy.
We have seen in recent years how any home may be subject to flood due to extreme weather events. Homes situated in areas that are least likely to flood means flood insurance will be easier and cheaper to obtain.
It is easy to see that the difference between water damage and flood damage can be interpreted making it difficult to have confidence in fully understanding the coverage. It can also come down to just when the damage occurred. Either way, both lines of coverage are something to discuss in detail with your insurance provider to be sure you are not exposed without protection.
