What Does Flood Insurance Cover?

We’ve been flooded with insurance questions since our last blog post where we addressed knowing if a fence belongs to you, or your neighbor. So, naturally, we turned to local insurance broker Randee Heer at All Saints Insurance. She and her team were nice enough to answer a bunch of questions compiled from viewers like you!

Thanks for taking some time for this, I know you guys are swamped. Let’s say there's a hurricane coming and there's that one spaghetti model that's different from all the others, but it has it coming right for my house. Can I still get insurance, or am I sauced?

 There's always that 1 stray string, right?  As a rule, the spaghetti models aren't the final determination. Each carrier has their own rules per se but the overall rule of thumb is that policy binding (issuing new policies) is restricted once a "Hurricane or Tropical Storm Watch or Warning” has been issued by the National Weather Bureau or when a Hurricane or Tropical Storm enters the Gulf of Mexico, or when a Hurricane or Tropical Storm is:  • West of 72° West Longitude and between 15⁰ and 32⁰ N latitude.  Binding restrictions are usually lifted 48-72 hours after the storm has passed. So if you wait till the last minute... sauced is definitely the word!

Is every house in a flood zone?

YES, YES, YES! Every house is in a flood zone. It just depends on whether it's a high-risk zone (special flood hazard area or SFHA) or a preferred zone.

Okay so, knowing that, how much does flood insurance cost if I'm not in a high-risk flood zone?

In a preferred zone premiums start at $209 and go up to $572 for a primary NFIP policy. Rates can also vary depending on if the property has had multiple flood losses.

Should I get it when I'm not in a flood zone?

Does Bourbon street sell booze? YES!  When in a preferred zone it's a relatively cheap investment to protect your largest asset (for most people). Don't let complacency or the thoughts "We never flood" or "We didn't flood for Katrina" deter you from protecting your home, business, and rental properties!  Baton Rouge flooded a few years back, The Grand Ol' Opry in Nashville flooded, and how about those Maryland floods in recent years? Anywhere it rains or there is some type of body of water no matter how small it CAN FLOOD!

Can I put my premium in escrow if I'm not in a flood zone? 

Well... you are in a flood zone just a preferred one (David: Sorryyy, forgot) so unfortunately most lenders will not allow you to escrow the flood if in a preferred zone (zones B, C, or X).

If my home insurance has a high deductible will flood insurance cover it?  

Sadly, no. They're two separate policies and they cover different things. Homeowner’s insurance will cover things like fire, theft, lightning, wind/hail, hurricanes. Flood insurance covers for rising water due to an “act of God.”

Can I use home and flood insurance at the same time? 

Absolutely! If Hurricane David (I see what you did there…) rips off your roof and pushes Lake Pontchartrain (may as well call it Lake David) into your neighborhood and floods your house then both insurances will come into play. 

What happens if a storm surge comes and rips down my fence. What covers that?

See also: who’s responsible to fix a fence if the “nice side” faces your property

This is a classic example of the "What Comes First, the Chicken or the Egg?" scenario. It depends on what caused the storm surge. Was it rising water or did the wind from a storm cause the storm surge? Was the fence already "down for the count" due to strong winds before the storm surge arrived at the party without an invite? If the wind pushed the water causing a storm surge, one could argue that it would be covered under the Wind/Hail portion of a Homeowners policy. However, it would be a matter of proving the cause of the storm surge. Ultimately, it would be up to an adjuster to decide the cause of the fence loss and what policy would cover the loss, if any.

If the damage to the fence was solely caused by rising water, then more than likely, this would fall under a flood policy. However, most NFIP based flood policies do not cover Other Structures such as fences. If you have any detached structures such as a pool house or a mother-in-law cottage, NFIP requires a separate policy for those detached buildings. In order to have coverage for "Other Structures" included in your main primary flood policy, you would need a flood policy from a Private Flood carrier (non-NFIP flood) that offers coverage for Other Structures.

My driveway drain overflowed and ruined the stuff I had in the garage. Are those contents covered? 

It would depend on the cause of the overflow. If it's backup of a sewer/drain you'd have to have that endorsement on your homeowner's policy for coverage to apply. If there's flooding (rising water) caused by an “act of God” then flood insurance would come into play.

My pipes froze and burst, flooding my bathroom, the one time I didn't want things all wet in there. Does flooding from freezing get covered by flood or homeowners or neither?

If covered, that would be under your home insurance. Subject to your policy conditions but generally for coverage to apply you must’ve done your due diligence to make sure that you did all of the preventative things to keep your pipes from freezing. When the weather people tell you 27 times to wrap your pipes let the water run. LISTEN! and take pictures of them wrapped. I always tell my clients and my team, it's not what you know, it's what you can prove. Pictures are worth 1,000 words!

Okay, I’m sold. What's my return on investment?

I would say peace of mind is priceless.  In the event of a flooding situation that results in a claim, not having to wait on government handouts or FEMA to be able to put your home back together is worth the premium.  Again, pick your vice - shoes, eating out, drinking, traveling, etc. I'd be willing to bet you the costs of those vices are more and temporary.  Protecting your home and your family from potential financial ruin... it's a no-brainer for me.  

How severe does my loss have to be in order to be covered? Is it covered fully? If my home insurance has a high deductible will flood insurance cover it?  

So the size of the loss isn't necessarily the biggest factor- it's if it's a covered loss. Technically you can make a claim for a covered loss for $1 if you wanted to as long as it's an actual direct physical loss. Now, the insurance company isn't going to pay you out $1 as this is where your deductible comes into play.  The higher the deductible, the cheaper your policy premium is BUT don't get so blindsided by “as cheap as possible” that you don't look at the big picture of what your finances would look like in the event of a loss.  For instance, I always tell my clients for the All Other Perils (fire, theft, lightning, etc) deductible most likely you're still employed if (God forbid) your house burns down. So take a $2500 deductible or more if you can afford to cover the damages under that amount. You don't want to make claims more than absolutely necessary as they follow you around for 3-6 years and can affect your rates and company options if your current company rates increase.

On the other hand, if we have another Katrina - most people are out of work, and taking a higher deductible (like 5%, $10,000, etc.) would likely cause financial hardship for those people when they take that big chunk of money out of their hurricane claim check. During a fire claim, the masses don’t typically lose employment, so the detriment of the higher deductible would not be as great.  We recommend $2,500 for All other Perils and 2% or 3% for your Named Storm or Hurricane deductible if you have that option in your area.

Does flood insurance cover more than one storm in a year? Are there annual limits or per-storm limits?

Yes, flood insurance can cover multiple floods in a policy period. The limits would be the policy limits you chose at the time you purchased the policy. 

Is my property covered fully?

If it's a covered loss then it should cover up to the limits of your policy that you purchased, after your deductible has been met and subject to the coinsurance clause of your policy (actual cash value or replacement costs).  So if you have a $50,000 loss with a replacement costs policy and your deductible is $1,000, then you're responsible for covering the first $1,000 in repairs and the insurance company will write you a check once your claim is processed for $49,000. If you have actual cash value (most of you will probably remember that term from Hurricane Katrina when you couldn't replace your 10-year-old roof or 5-year-old fence with the money you got from insurance after depreciation!), they will depreciate your covered items and pay out the depreciated value.  Replacement costs average about $3-500 more per year on your policy but it's peace of mind that you actually CAN buy :-)

I’m thoroughly convinced I need coverage. Where can I sign up for flood insurance?

You can reach out to my team at All Saints Insurance and we can get the ball rolling for you. You can also visit our site and quote/buy flood insurance yourself!

Randee Heer owns All Saints Insurance, an independent, Louisiana-based insurance agency. All Saints offers products from many different companies which allows us them find the right mix of companies, coverage, and rates for their clients. They can be reached at (985) 201-8700 or https://www.allsaintsinsurance.com.

David McLaughlin (yours, truly) is a long-time Slidell resident, and REALTOR® with over 15 years of experience helping others buy, sell, and invest in real estate. He can be reached via email at david@homesnearnola.com or by dialing 985-707-5270.