Flood insurance – are you adequately covered?
In the wake of Superstorm Sandy homeowners all around the country have been jolted out of their long summer’s nap back into the insurance reality show. Homeowners are taking a second look at their flood insurance and starting to realize that it may not be as good a deal as they thought.
As we talked about last week, homeowner’s insurance does not cover your home for anything that resembles a flood. People who live on or near the water or in what is designated a flood zone need to purchase federal flood insurance. Since Superstorm Sandy hit the East Coast in October, the demand for and questions about flood insurance has surged.
The first thing homeowners who are vulnerable to flooding need to know is that the federal National Flood Insurance Program covers up to $250,000 to rebuild a home and up to $100,000 in contents. This number is the same whether you live in Alabama or the New Jersey coast which was so badly hit by Sandy. Because of its limitations, homeowners who feel this amount falls short of the coverage needed for rebuilding their properties are looking into so-called excess or supplemental flood coverage.
Supplemental flood insurance coverage policies are sold through private insurers and will vary in cost depending on several factors including the home’s likelihood of flooding and its cost to rebuild. They will also vary in the comprehensiveness of coverage and could include homes with a basement, cover living expenses and cover increased replacement values based on building costs in the specific region. Obviously homes two blocks from the beach will cost less to insure than beach front properties.
Excess flood insurance policies do come with their own set of caps and limitations on coverage. For instance valuables lost due to flood damage like furs, jewelry and valuable silverware typically are not covered by excess flood policies. If a homeowner wants to insure these items or other valuables like art and antiques they will have to purchase a “valuable articles policy” on top of the supplemental flood insurance policy which is on top the federal flood insurance policy.
However, even after getting flood insurance there are several things you can do to minimize losses in your home and ensure your family’s safety and quick clean up. It is essential to create a personal flood file containing information about all of your possessions and keep it in a secure place like a safe deposit box or waterproof container. Include in this file a copy of all insurance policies and agent contact information and a household inventory. Keep a written list of major household items and electronics including serial numbers and receipts as well as digital photos and/or videos of the contents of rooms to back up the lists.
If you do have a loss due to flooding take photos or videos before and after the clean up to go along with a comprehensive list of damaged items, and don’t be shy to challenge the insurers’ estimates. These estimates are based on computer models and don’t always reflect local costs following a major storm. And if you really have a problem with insurance adjusters, consider hiring a public adjuster who typically is compensated with a percentage of any proceeds. Public adjusters are licensed and affiliated with the National Association of Public Insurance Adjusters.
Storms don’t have to be super sized like Sandy to give you a lot of grief and seriously damage your home. At least Sandy did one thing – she woke us up to the dangers of flooding and is forcing us to get educated about adequately covering our home and valuables.