Insurance For A Flooded Mancave

Spring-like weather in January has hit the Midwest.  As much as we have been enjoying the temperatures, our yards are saturated with the snow melt.  Now, much of the area is under a "flood watch" as new rainfall is expected which may cause rapid runoff.  What's a homeowner to do in anticipation of a wet basement?  Especially when your basement is really a very expensive "mancave" complete with all of the amenities.  Let's look at your options:

You've seen all the commercials and heard the news that "flood" is not covered by your homeowners policy, so, let's buy a flood policy.  Problem #1, a new flood policy normally has a 30 day waiting period before coverage can take place.  Since the rain is predicted tonight, the flood policy for this current situation is not the answer.

Problem #2, even if you already have a flood policy in effect, the flood policy has very limited coverage for the lowest elevated floor of your home; i.e. the basement. More bad news, most personal property in the basement is not covered by the flood policy.  You knew that, right?

Many of you are thinking that surely, water running into a basement isn't really a flood. You are thinking that your homeowners policy will take care of the damage.  Let's look at one section of the standard water exclusion on a homeowners policy:

-  " excludes water which seeps or leaks through a building, sidewalks, driveway, foundation".

What?  You have been paying those increasing insurance premiums for years and you don't have coverage for water in your very expensive mancave?  Surely, Insurance Addict, you are mistaken.  Ummm...not really.  Let's discuss the homeowners policy and water damage.

The easiest way to try to keep it straight is to remember that your home policy will cover sudden and accidental losses.  Examples: pipes burst in your walls, the washing machine hose gets disconnected and spouts water for hours, the toilet runs and runs and runs for hours creating a waterfall from your second story steps to the living room.  These are examples of sudden and accidental water damage.

Where CAN you get the coverage you need for your basement and its belongings?  For tonight's rain, prevention is the best answer.  As I learned the hard way, all of my precious "goodies" that are stored in my basement are now kept in  large waterproof plastic containers.  When my lawn can't handle the rain water and it runs in my basement, I know that my keepsake photos, papers, etc. are protected.

Another option is to invest in a water sensor or basement flood alarm.  That way when the water starts to invade your mancave, you can move or elevate the larger items, like electronics.

Make sure your home is in good repair by caulking foundation cracks and inspecting gutters and downspouts.  These are just a few items on the Trusted Choice "Time To Winterize" list.

If sewer backup is a problem in your lower level, add "Sewer and Drain Backup" coverage to your home policy.  You can buy back this protection for usually less than $75/year.

Keep in mind that the flood policy defines a flood as "unusual and rapid accumulation or runoff of surface waters from any source".   (exactly what many of us will experience after this January rain)  My suggestion is to contact your Trusted Choice agent and ask for a price on a flood policy for your residence.  You may be surprised at the affordability. Remember, once your flood policy is in effect, there is still no coverage for your personal property in the mancave.  You will, however, have coverage for the drywall, furnace, hot water heaters, electrical and plumbing systems and other "building" items.

Water damage claims are some of the most confusing, frustrating and costly types of claims.  Talk to your Trusted Choice agent about your options BEFORE your "mancave" is damaged.

A Tale of Two Policies - Home vs. Flood

The wrath of Hurricane Sandy will forever live in our minds.  One of the saddest tales that recently came to light, was that of the town of Breezy Point, NY.  Breezy Point, sometimes referred to as the "Irish Riviera", incurred not only devastating wind and water damage from Hurricane Sandy, but also lost more than 100 homes to fire. Preliminary reports indicate a transformer may have sparked the fire while Sandy's torrential winds spread the fire through five blocks of homes.  Thankfully, not one life was lost to those fires.

A news reporter interviewed one of Breezy Point's displaced residents, who indicated that his home was destroyed by the fire while his son's home was ravaged by flooding.  Both families were eager to be able to visit their "homes" and begin any salvage and cleanup operations.

Enter the Insurance Geek, aka, me.  What a different path each of these two families will encounter as they start the claim process through the home insurance policy (fire claim) versus the flood insurance policy (flood claim).

Additional Living Expense - This coverage will pay for expenses for the family to live in a hotel, eat meals at a restaurant, rent an apartment, even pay for family pets to stay at a "pet hotel".  A typical homeowners policy provides this coverage, above and beyond the amount of insurance on the home and contents.  A flood policy specifically excludes this coverage.

Finished Basement/Family Room and Its Contents - A typical homeowners policy will pay to replace the paneling, bookcases, carpeting, "mancave" and furnishings, including the flat screen, comfy recliner, etc.  A flood policy provides limited coverage in the basement area.  Flood insurance will pay for damaged structural elements and essential equipment; i.e. central air units, furnaces, washers and dryers.

Deductible - A deductible is the amount of dollars the claim must exceed before the insurance company will participate in the claim.  A typical homeowners policy has a flat deductible that applies to all instances of one claim.  Some homeowner policies carry a separate wind deductible that is a % of the dwelling amount.  Flood insurance has a flat deductible that applies to each instance of a claim.  In other words, the deductible will apply to the dwelling claim and separately to the contents claim.

Valuation - Replacement versus Depreciated Value  -   Both policies require that the homeowner insure the building to at least 80% of what it would take to replace the dwelling.  Once that provision is met, the typical homeowner policy will pay up to policy limits.  Many home insurance companies offer "Additional Replacement Cost" coverage that will increase their maximum amount of coverage by 25%, 50% and in some cases, a "guarantee" to replace the home, whatever it costs.  The flood policy, however, only allows the insured to purchase up to $250,000 coverage.  So, if the home requires more than $250,000 coverage to replace it, the flood policy will not answer.

Contents - A typical homeowners policy will cover contents on a replacement cost basis.  The flood policy has no provision for replacement cost on contents.  The flood policy always provides depreciated coverage on contents.

Many Americans affected by Hurricane Sandy, will begin their travels in this tale of two policies.  For all of us, though, it is a good time to discuss insurance needs and expectations with a Trusted Choice Agent.   Spend some time assessing the replacement cost estimate of your home by visiting AccuCoverage.com.   Enlist the assistance of your mobile devices to document your contents using an inventory app like "Know Your Stuff".   As evidenced by Sandy, we never know when and what type of catastrophe may hit our home.

To quote Charles Dickens from his famous novel A Tale of Two Cities,

“Then tell Wind and Fire where to stop," returned madame; "but don't tell me.”