Many homeowners are in the dark when it comes to what is and isn't covered in their homeowners insurance policy. A recent survey by insuranceQuotes.com attempts to shed some light on what homeowners should know when it comes to their homeowners insurance policy, including flood insurance.
According to insuranceQuotes.com’s survey, flood and mold damage are among the most common misconceptions when it comes to homeowner's insurance. The survey revealed that 35% of Americans incorrectly believe that a standard homeowner’s insurance policy covers flood damage, and 34% incorrectly believe that a standard homeowner’s insurance policy covers mold damage. These homeowners may be unaware that flood insurance is a premium provided through the National Flood Insurance Program (NFIP), rather than an included feature in their homeowner’s insurance. In general, a homeowner flood insurance policy covers up to $250,000 in structural damage and up to $100,000 in content loss. However, some homeowners may not be aware of what a “flood” actually means.
“Many consumers, when discussing or describing a loss, think that the words ‘flood’ and ‘water damage’ are interchangeable and mean the same thing,” says Mark Carrasquillo, an agent with the New York City-based brokerage E.G. Bowman Company on insuranceQuotes.com. “This is entirely wrong. In the insurance world the terms are very different.”
According to the NFIP, a flood is “a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from overflow of inland or tidal waters, from unusual and rapid accumulation or runoff of surface waters from any source, or from mudflow.”
Additionally, homeowners need to be aware of what parts of their house are covered by the NFIP. For example, Frank Darras, a national consumer litigation lawyer, told insuranceQuotes.com that the only items covered in your basement are structural elements and essential equipment, which include electrical and HVAC systems.
The NFIP’s availability to homeowners may improve in coming months, especially for those impacted by natural disasters. Recently, the House Financial Services Committee unanimously approved two bills to reform and reauthorize the NFIP. H.R. 3111 would bring improvements to the NFIP appeals process, accountability, and transparency of claims process in the aftermath of Hurricane Sandy, and H.R. 3167 would reauthorize the NFIP for five years and includes numerous reforms to increase affordability, mapping and modernization.