Water is proof that you can have too much of a good thing. While we all need it to survive, it can easily cause more than its fair share of damage to your home or business. Living in South Florida, we know that you’re especially aware of this due to the countless disasters that can befall us, from sinkholes and hurricanes to good old-fashioned heavy storms. What you may not be aware of is the fact that not all insurance policies from water damage are created equal.
There are essentially two types of insurance policies that deal with damage due to water: a flood insurance policy and your standard homeowners insurance policy. The losses covered by one, however, might not be covered by the other. Knowing the differences between the two policies and what they cover can not only save you a lot of money but also prevent a significant headache in the process.
Here are a few of the important distinctions to make between the two policies. It’s important to keep in mind that these are general differences and every insurance policy is different and there are always exceptions; it’s absolutely essential that you sit down with your insurance agent and go over your specific policy.
The most common difference to draw right off the bat is that homeowners insurance does not cover events such as hurricanes, earthquakes and floods. It is designed to protect your home’s structure and its contents from certain perils, but not the aforementioned ones. It does, oftentimes, provide coverage for many types of water damage to your home or business, such as broken water pipes, heavy rain soaking through the roof and letting water drip through the attic or ceiling and hail breaking a window to give rain free access into your home. That being said, some insurance companies are starting to write in an exclusion for roof leaks in their homeowners policies.
Oddly enough there are certain niche cases in which your homeowners insurance covers you in case of a flood. For example, if a hurricane caused a nearby creek to swell and flood your home, thus leading you to evacuate your home and leaving it as easy prey to looters, your homeowners insurance would cover the losses from the theft. You would need additional insurance to offset losses directly affected by the flood.
As you probably guessed, flood insurance provides coverage for damage caused by floods. The insurance companies define “flood” as a “rising and overflowing of a body of water onto normally dry land.” This denotation is useful in distinguishing flood damage from other types of water damage. Most mortgage lenders in areas at high risk for floods, or flood zones, require flood insurance to secure the mortgage. In other areas less prone to floods, it is up to the individual as to whether they want to carry flood insurance (an interesting side note: more than 20% of flood-related claims from low-risk areas).
A few examples of flood damage include a heavy rain soaking through and damaging your foundation, sinkhole damage (though some homeowner policies cover this), or a nearby body of water overflowing its banks and draining into your home, whether due to a hurricane or other heavy storm.
While flood insurance was specifically created to cover flood activity, homeowners insurance is broader and meant to cover various insurable events. The takeaway from this comparison is that the two types of policies are not duplicates and do not overlap in their coverage. They were intended to complement each other to provide maximum protection against damage caused by water.
Don’t forget: it is your responsibility to talk with your insurance agent to make sure there are no holes in your coverage.