Dwelling, homeowner, condominium, farm and tenant policies exclude coverage for damage due to flood, sewer backup and sump pump failure. Many companies offer the buy back of limited coverage for sewer backup and sump pump failure. Not all companies offer the same level of coverage so it may be useful to shop around for the one that will meet your needs. If the potential risk of flooding is a significant factor in your risk analysis these policies will not provide flood coverage, even with the buy back endorsement for sewer backup and sump pump failure.
Businessowners, commercial packages and commercial property policies generally exclude flood, sewer backup and sump pump failure. However, some commercial insurance companies also offer special policy forms or coverage enhancements, which may bring back some limited coverage for these exposures. If the potential risk of flooding is a significant factor in the risk analysis for your business you may be able to obtain an enhanced policy with some coverage. Large commercial enterprises may also be eligible for a policy known as "Difference In Conditions" that may provide an additional layer of flood coverage. It is recommended that you discuss the availability of such coverage with your agent.
National Flood Insurance Program
The National Flood Insurance Program (NFIP) is the only source for flood insurance. Property owners can buy a flood insurance policy directly from NFIP by contacting a licensed Property & Casualty agent. All P&C agents are eligible to write directly with NFIP. In addition, NFIP has contracted with some insurance companies to write the coverage on behalf of NFIP using their companies name on the policy. These are known as "Write Your Own" (WYO) companies. The WYO company policy and premiums are identical to the federal policy.
Types of flooding
Flood is defined as an overflowing of water onto land that is normally dry. The overflowing of water generally occurs in one of four ways:
River floods occur when a river overflows its banks. This is generally associated with periods of high water flows such as spring runoff or icejams.
Lake floods occur when a lake or other similar body of water overflows its banks. This is generally associated with seasonal fluctuations or an abnormal wet cycle.
Tidal floods occur when a major storm event such as a tropical storm or hurricane cause larger then normal increases in tides.
Flash floods occur in relatively localized areas when the area of normally dry land is unable to handle large amounts of rain in a short period of time.
River flooding is common with some rivers flooding every year. Locations within a river's flood plain can expect to see flooding each year depending on the amount and timing of the seasonal run off. All rivers whose river basins are subject to unusual or unseasonal amounts of precipitation are subject to flooding at any time.
Lake floods are less frequent but generally associated with seasonal run off and unusual wet cycles.
Tide floods are directly related to the frequency of major tropical storms.
Flash floods are the most unpredictable because they occur in places that normally are not associated with flooding. These can occur in virtually any locale. The National Flood Insurance Program indicates between 20% and 25% of all flood claims come from areas outside of traditional flood plains. Other sources suggest that the odds are as high as 1 out every 3 flood events are not related to river, lake or tidal floods.
The impact of a flood
Buildings and contents that come into contact with or are inundated by flood water may suffer direct damage. The extent of damage may vary based on how long the object was in contact with the water and how contaminated the water was. If the water was relatively clean and was in contact for only a short time some items may be salvaged, ie; cleaned and dried with little or no impact. However, items like electrical appliances and fixtures, and electrical wiring once contaminated are likely not safe to recover and need to be replaced.
Buildings that are inundated for a long period of time or those in the direct path of moving flood waters have the potential for structural damage. Foundations and walls may buckle or shift, compromising the structural integrity and safety of the building.
Mold and mildew can be a serious problem following a flood event if the clean up and drying process are not done promptly and thoroughly.
A property may be fortunate not to have direct damage from a flood but still suffer damage. Damage can occur as a result of some other failure that occurred as a result of the flood. Typical failures are power outages, sewer system and sump system failures.
Power outages can occur because the utility system is either damaged by the flood or the utility company has had to shut down service due to safety concerns. Without power refrigerators, freezers and electrical heating systems stop working. Food spoilage and freezing are potential problems.
Sewer system failure occurs when a city sewer system fails either due to lift stations not working as a result of the power outage or when the system is overwhelmed by the flood water causing it to back up. Sewer contamination can be extensive in lower levels of a building.
Sump system failure occurs when power to sump pumps stops or the volume of water entering the system exceed the ability of the system to remove it.