Since the unprecedented flooding began in Houston, we have received many calls and emails regarding flood coverage. Here are 7 basic flood facts every property owner should know:
- What is flood? Simply stated, a flood is water from the 'ground up' covering more than two acres of normally dry land resulting from a) overflow of inland or tidal waters; b) unusual and rapid accumulation or runoff of surface waters from any course; or c) mudflow.
- Flood insurance is excluded from standard home and business policies. Flood coverage may be obtained by purchasing a separate policy.
- Roof leaks, burst pipes and water damage from appliances or plumbing is not considered flood.
- We often hear clients say, "our home is not in a flood zone." What they mean is their property is not in a higher risk zone. However, every property is in a flood zone with certain zones more prone to flooding than others. Mortgage lenders require flood insurance if a property is in a higher risk zone. However, as we have seen in recent years, flooding can and does occur in lower risk zones.
- Unless required by their lender, most property owners do not purchase flood coverage. As a result, when catastrophic flooding occurs a vast majority of owners are left with no coverage.
- Flood insurance is typically capped at 250k for homes and 500k for business properties. These limits can be too low so to properly insure many properties for flood, an excess flood policy is necessary.
- The federal flood program operates at a massive deficit so in recent years rates have risen in order to lower the deficit. If the federal flood program did not set rates, a truly competitive flood market would result in significantly higher flood rates for coastal or higher risk properties with many properties considered uninsurable.