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Home > Blog > Explaining the Exclusions of Flood Insurance to Clients?
WEDNESDAY, JUNE 3, 2020

Explaining the Exclusions of Flood Insurance to Clients?

flood insuranceMany homeowners mistakenly believe that their home insurance policy automatically covers flooding. As any home insurance provider knows, this isn’t the case. Floods are frequently excluded from property insurance policies such as home insurance and can be added as an endorsement. 

 

There are limits even on a flood insurance policy, however, and it’s important for clients to understand the distinction between floods that are covered and floods that are not. 

 

Sewer Backup 

Pipe bursts and sewer backups can cause a ton of water damage, but this damage unfortunately isn’t covered by flood insurance. However, if the sewer backup is directly caused by a flood, damage can be covered. 

Just like with other property policies, flood insurance does not cover damage that occurs due to negligence. In other words, if a homeowner fails to maintain upkeep on their pipes and one bursts, causing damage to the home, the damage will not be covered under flood insurance. 

 

Personal Belongings Limitations 

Certain items may have little to no coverage under flood insurance As with home insurance personal belongings coverage, flood insurance excludes certain items. Art, furs, jewelry and electronics have limited coverage under flood insurance. On average, coverage for artwork and furs caps at $2,500. Flood insurance also does not cover paper money. 

 

Moisture, Mildew and Mold 

Whether caused by a flood or not, it’s likely a claim concerning moisture, milder or mold damage will be denied. This is because damage by these incidents can typically be avoided by proactive actions by the property owner. Claims can be denied even if mold or mildew is caused by a flood if it’s decided that the damage could have been prevented. 

Moisture often causes issues in tropical areas and states, such as Florida and other coastal states. Homeowners should understand that damage due to a moist atmosphere will not be covered under their flood insurance policy, so they should work to take preventive measures to avoid damage caused by their area’s atmosphere. 

 

Earth Movement 

Damage to the home from movements in the earth, even if caused directly by a flood, will not be covered under flood insurance. Earthquakes and sinkholes, for example, are not covered under flood insurance. 

 

Plants and Landscaping 

An average flood insurance policy does not cover plants, landscaping and certain unattached structures such as fences or outdoor signs. It also doesn’t usually cover items that are left outside on the property such as patio furniture or power tools. 

 

What Does Flood Insurance Cover? 

At this point, a client may ask, well what does a flood insurance policy actually cover? Is it even worth it? 

Despite its exclusions, flood insurance provides a lot of coverage for flood damage to homes and items such as: 

  • Electric systems 

  • Furnaces 

  • Water heaters and plumbing systems 

  • Permanent carpeting 

  • Appliances such as dishwashers, refrigerators, washers, dryers, microwave ovens and cooking stoves 

  • Window blinds and curtains 

  • Permanent cabinets, paneling and bookshelves 

  • Foundation 

  • Walls and staircases 

  • Anchorage systems and detached garages 

  • Pumps, well water tanks, fuel tanks and solar energy items 

  • Personal belongings 

  • Window air conditioning units 

 

Flood insurance can help with the cost of repairs and replacement as well as some clean up, such as removing debris. 

 

Is Flood Insurance Worth the Cost? 

Some clients may be hesitant to purchase additional flood insurance policy. If they live in a high-risk area for floods, be sure to let them know the benefits of carrying flood insurance and the possible expenses they will have if they’re caught in a flood without it. Out of pocket, the average cost for repairing flood damage is between $1,142 and $4,725. Damage to the home’s foundation or systems (such as electrical systems) tend to cost higher to repair or replace. In comparison, the average cost of flood insurance is around $699 a year (about $58 a month). 

This cost varies depending on the state, location within the state, value of the home, claims history, credit score and other factors. 

Some homes won’t necessarily need flood insurance. Any home in a relatively tropical area with a history of floods, however, should at least consider purchasing flood insurance. 

 

Advise Preventing Flood Damage 

Even for those clients who don’t want flood insurance, you should advise them to safeguard their home against possible floods by landscaping with care, cleaning out gutters regularly and keeping up maintenance on the home’s siding and systems. 

Posted 11:56 AM

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