Flood Damage vs. Water Damage

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March 31, 2010 -- Water, water everywhere, but not a drop should be there. With dismay, you discover that your basement is filled with damaging water. Will your insurance policy cover the loss?  It depends on the type of insurance you chose to purchase and how the water entered your house.

There basically are two insurance policies that deal with a homeowner's damage due to water -- a flood insurance policy and a homeowners insurance policy.  Losses not covered by one of these policies may be covered by the other.

FLOOD INSURANCE
As the name implies, a standard flood insurance policy, which is written through the National Flood Insurance Program, provides coverage for damage caused by flood. The dictionary defines "flood" as a rising and overflowing of a body of water onto normally dry land. For insurance purposes, the word "rising" is the key to distinguishing “flood” damage from “water” damage.

Generally, damage caused by water that has been on the ground before damaging your home is considered to be flood damage. Some examples of flood damage include:

• A nearby river overflows its banks and washes into your home.
• A heavy rain seeps into your basement because the soil can't absorb the water quickly enough.
• A heavy rain or flash flood causes the hill behind your house to collapse into a mud slide   that oozes into your home.

Flood damage to your home can be insured only with a flood insurance policy -- no other insurance will cover flood damage. If you are living in a flood plain, flood insurance may be an excellent purchase.

HOMEOWNERS INSURANCE
A homeowners insurance policy does not provide coverage for flood damage, but it does provide coverage for many types of water damage to your home. Water damage occurs when water damages your home before the water comes in contact with the ground. Some examples of water damage include:

• A hailstorm smashes your window, permitting hail and rain free access into your home.
• A heavy rain soaks through the roof, allowing water to drip through your attic or ceiling.
• A broken water pipe spews water into your home.

Though flood damage is not covered by your homeowners insurance policy, losses from theft, fire, or explosion resulting from flood damage are covered. For example, if a nearby creek overflows and floods your home, and looters steal some of your furnishings after you evacuate, the theft would be covered by your homeowners insurance.  However, the flood damage would be covered only if you have flood insurance.

Talk to your LSB Insurance Agent about potential water damage, then decide which insurance coverages you need to protect your home, its contents, and your family.

This article was written by John P. Hlas, CIC. John is Vice President / Multi-Line Agent and Operations Manager for LSB's Insurance Department.