What is covered by Flood Insurance and what is not? The answers may surprise you!
Kathy Sperl-Bell: Do I need flood insurance? Hi, this is Kathy Sperl-Bell, Active Adults Realty in Delaware, and in today’s Ask the Broker, we’ve invited Randy Brown from Avery Hall Insurance to answer this very important question.
Do I need flood insurance?
Randy, wasn’t it a week ago Friday, we had that huge rainstorm. I don’t know if I’ve ever seen six inches of rain in one day since I’ve lived in Delaware.
Randy Brown: Yes. It was about a week ago Friday that we had a huge rainstorm that caused a lot of unusual problems for a lot of homeowners.
You asked the question, do I need flood insurance? Well, there’s a lot that goes into that, that we can’t go over in three to five minutes.
Kathy Sperl-Bell: But the highlights?
Randy Brown: The highlights is it’s up to your risk tolerance. Flood insurance is when two or more properties or 500 acres are affected by rising water and this can affect your home by water coming from the outside in. So it’s your doors. A lot of people might have a basement door that it leaks into. That is considered flood points coming outside in.
An example that a lot of people don’t think about is if you’re sitting down on an incline from another home and they have an outdoor pool and their outdoor pool breaks, or above ground pool breaks, and the water comes down to your house and comes into your home. That is considered a flood.
Kathy Sperl-Bell: So if you don’t have flood insurance, you’re not covered.
Randy Brown: Correct.
Kathy Sperl-Bell: All right, let’s talk about another situation that one of our clients called and their sump pump stopped operating. I don’t know. They weren’t sure whether the breaker went or whatever. The sump pump went and it wasn’t a lot of water, but there was water in the basement.
So what covers a situation like that?
Randy Brown: That’s called sewage water backup coverage. So this is where the sump pump is there to do a job and it either fails when the water starts coming back in the basement or sometimes a lot, we see electricity goes out and the sump pump can’t come on during those time periods. The water comes back up into the home, that sewage of water backup coverage.
On your homeowner policy, typically that is excluded, however, you can always put an endorsement on to include that coverage. In Delaware, it’s five, 10, 15,000 worth of coverage you can get.
Kathy Sperl-Bell: So that would be added to your homeowners policy, not a flood insurance policy.
Randy Brown: Correct. Correct.
Kathy Sperl-Bell: You really need to understand what’s covered by what kind of policy.
Randy Brown: Exactly, especially when you say the word water. Many times we’ll have somebody contact and say our home is flooded. Do I have flood coverage? And what they’re talking about is a pipe might’ve broken in a ceiling or in the house. If a pipe breaks that is covered. The damage that the pipe does to the water is covered under your typical homeowners policy.
However, water coming up through the sump pump or coming up through the toilets or other events, if you have sewage workers out there and they back you up and it comes back into the house, that’s an endorsement that has to go onto the homeowners policy called the water and sewage backup coverage.
Kathy Sperl-Bell: So that’s a really good point because I remember when we did have a client who just after they finished major renovations, a pipe under the sink burst. They weren’t home and literally it flooded their entire home. So that would be covered by your standard policy, most likely.
Randy Brown: Your homeowners policy. Most likely, typically all forms will cover that. It’s very unusual not to see that. Even something with your hot water heater breaking, the water that comes out of there and doing damage. Now, the hot water heater if it just failed from normal wear and tear, wouldn’t be covered itself but the damage done by the water would be.
Kathy Sperl-Bell: Okay. So do you recommend that everyone get flood insurance?
Randy Brown: As I can’t necessarily… I can guide you and explain to you what the coverage is. It’s up to you, the homeowner, to do their own risk assessment, whether that value is worth it to them or not.
Flood insurance typically always goes through FEMA, so it’s always a standard rate depending on what zone you’re in and what your elevation certificate says. So it’s always a good suggestion to have that conversation with your insurance agent or broker to understand what kind of risks you have, what the cost of flood insurance would be, so you and your family can make that decision.
Kathy Sperl-Bell: If you’re not in a flood zone, that coverage is not terribly expensive, correct?
Randy Brown: It’s not, it’s not. If you’re not a flood zone, it’s anywhere, depending on if it’s your primary home, $400, to a secondary home around seven, $800 a year.
Kathy Sperl-Bell: So well worth it.
Randy Brown: Yeah, definitely.
Kathy Sperl-Bell: So I guess the question would be, I’m looking at homes. I’m looking at an area like many of our clients are coming from out of state.
How do they really know whether the home they’re looking at is in a flood zone or not?
Randy Brown: Well, one thing that they can do, if there’s a particular property they’re definitely interested in looking at or showing some interest in even making an offer on, check with your agent. They have access to systems that they can tell you quickly if it’s in a flood zone and instruct you what to do from there, when you’re working with your realtor and the seller’s realtor on that property, to see if they’ve got elevation certificates, seeing if it’s a community that’s been in the flood program for quite a while, or if something can be grandfathered, transferred over. That can make quite a difference between a $700 policy versus a $4,000 one. It’s a big variance if it is in a flood zone.
Kathy Sperl-Bell: That’s a very good point. Because I always say, if you don’t have an agent, then give Randy a call at it Avery Hall, because I’ve learned over the years that you have the current flood zone maps.
Randy Brown: Correct. Yeah.
Kathy Sperl-Bell: You know, it’s not hearsay from somebody that you asked in the neighborhood but it’s the actual facts.
Randy Brown: Yeah.
Kathy Sperl-Bell: Well, there are a lot of other issues that we can talk about and I think it would be a good idea to do this regularly but today we wanted to focus on flood insurance. Should you have it? How do you find out whether your home that you’re looking to purchase is in a flood zone and what might it cost you?
Randy Brown: Absolutely.
Kathy Sperl-Bell: Thank you very much, Randy. Avery Hall Insurance has offices throughout Delaware and the Delmarva Peninsula over into Maryland and they’ve been our insurance brokerage for more years than I can remember.
So thank you very much for joining us and if you have any questions, just contact us, give us a call and ask the broker.