Flood insurance is catastrophic insurance, which means there are limits on how much insurance will be provided. For example, residential buildings can only receive up to $250,000 in coverage, non-residential buildings only $500,000. Contents within the home are also limited up to $100,000 for residential ($500,000 for non-residential) locations.
Direct physical losses by flood are covered. Also covered are losses resulting from flood-related erosion caused by excessive waters accompanied by a severe storm, flash flood, abnormal tidal surge, or the like, which result in flooding. Damages due to mudflows, if caused by flooding, are also covered. Coverage is provided for flood damage to the building itself. This includes foundation elements, as well as posts, pilings, piers, or other support systems for elevated buildings.
Coverage is excluded for:
· Most buildings located entirely over water (like boathouses),
· Structures other than buildings (such as fences, retaining walls, swimming pools, underground structures), and · Items like walkways, decks, driveways, and patios located outside the building. Coverage is also available on an actual cash value basis for the contents (your personal possessions) located inside the building. However, it’s very important that you know that coverage on valuable items (such as artwork, rare books, jewelry, and furs) and personal property used in business is limited to only $2500.
This section is not intended to be a complete description of coverage. LoPriore Insurance can provide you with complete provisions.
Coverage for basements and enclosed areas beneath the lowest floor
You need to be aware that flood insurance only provides limited coverage for these areas. Coverage is available for equipment necessary to the habitability of the building, such as utility connections, sump pumps, well water tanks and pumps, fuel or water tanks, furnaces, clothes washers and dryers, food freezers and air conditioners. Clean up expenses are also covered. Likewise, dry basement walls (unpainted), sheet rock walls (including fiberglass insulation), and ceilings are covered.
Note that finished structural elements (such as paneling and linoleum) and contents (such as rugs and furniture) in basements and enclosures are not covered.
Replacement cost versus actual cash value
Here’s an extremely important point. Replacement cost coverage (which pays to replace or restore structure items) is only offered on a limited basis, and only for a single-family dwelling that is your principal residence. To receive replacement cost coverage on the structure, you must be insured for at least 80% of the building’s replacement cost at the time of the loss or the maximum amount of coverage available, whichever is less.
Contents losses are always adjusted on an actual cash value basis. That means that you only receive what the item was worth as of the day of the loss. For example, if you bought a $300 color television two years ago and it was damaged during a flood, you might only receive about $50 for it, if that is what the equipment was worth on the day of the flood. Your building loss would also be handled this way unless you qualified for replacement cost coverage.
Remember, flood insurance is not meant to restore your home to its original condition, just to get you back on your feet! And, it’s much better than having no coverage at all.
A deductible is the amount you have to pay out of your own pocket before the insurance coverage kicks in. Standard flood deductibles are $500 and $750. Higher deductibles are available to reduce policy premiums. Please be aware that with flood insurance, your deductible will be applied to both your building and its contents, even though they might be damaged by the same flood.