Flooded.HouseAfter a flood or other substantial water event, flood insurance policy holders are often surprised to learn what is covered by their flood policy – and more surprisingly, what is NOT covered under their flood insurance policy.  As I have written about before, flood insurance is totally separate from homeowners insurance, and both provide separate coverage for different types of loss.  Specifically, homeowners insurance does not cover water damage from flood.

In order to qualify for coverage under your flood insurance policy, there must have been a “flood” in your area.  A “flood” condition occurs when water covers at least two acres of land that is normally dry, or if the water condition has damaged two or more properties in your area.  Additionally, this water has to come from either (1) overflowing or inland tidal waters, (2) unusual, rapid accumulation or runoff of surface waters from any source, or (3) mud flow (defined as mud that is carried by a flow of water, thereby creating a river of mud).  Depending on the circumstances, there may also be coverage for waterfront land that collapses or sinks as the result of water that is above anticipated cyclical levels.  Importantly, damage caused by water that overflows out of sinks, toilets, sewers, or similar sources does not qualify for flood insurance coverage, but should instead be covered by your homeowners insurance policy.

The maximum available coverage limit for flood insurance is currently $250,000.00 for your principal dwelling and $100,000.00 for personal property.  Unlike the coverage available under your homeowner’s insurance policy, the building coverage provided under your flood insurance policy is very specific as to what it covers – and what it doesn’t cover.  In order to avoid a lot of heartache later, you may want to review your policy before a loss in order to better understand the limited coverage that flood insurance actually provides.  You can click HERE to see a listing by FEMA as to the specific items that are currently covered under the standard National Flood Insurance Program policy.

The coverage for personal property loss under flood insurance is even more limited – especially for personal items in a basement.  In general, the only personal property covered below the “lowest elevated floor” would be your laundry equipment, freezer (but not refrigerator!), and portable air conditioner.  There is no coverage for any flooring, drywall, window treatments, or any other type of personal property (furniture, electronics, etc.) stored in your basement or below the lowest elevated floor.  As an additional jab, your flood insurance policy only covers your personal property on an “actual cash value basis”, as opposed to what you actually paid for the items or what it would take to replace them.

There is no flood insurance coverage for any loss of use, additional living expenses, or temporary housing while your home is being repaired.  There is also no coverage for any loss of business income.

As you can imagine, the flood insurance policies issued by the National Flood Insurance Program are not overly consumer friendly and really only provide the most basic of coverage.  Should you ever have questions regarding the coverage available under your insurance policy or the manner by which to submit a claim, please feel free to contact our office and we will do our best to answer any questions you may have.

 

do-i-really-need-flood-insuranceMost people believe that when they buy homeowner’s or commercial property insurance that they will be covered for any damage that may occur to their property.  Unfortunately, as many people have painfully learned during recent flooding events, the normal policy of homeowner’s property insurance does NOT provide coverage for damage caused by “rising water” or flood.  This realization often comes too late for property owners and only after catastrophic damage has occurred to their property due to a flooding event.

The usual policy of homeowner’s insurance will only cover storm related water damage if it is caused by “wind blown” water, as opposed to “rising” water.  A good example of “wind blown” water would be water that comes through a broken window or a roof opening caused by the storm.  On the other hand, damage caused by the buildup of rain water which eventually enters the structure and causes flooding-type damage would not be covered under the standard policy of homeowner’s insurance.

As can be easily imagined, disputes often arise between property owners and their insurance companies over whether damage was caused by “rising” water as opposed to “wind blown” water.  The property insurance company, obviously, would like to prove that the damage is from a flood event – and thereby not covered under its insurance policy – whereas the property owner would advocate that the damage was the result of water entering through an opening in the structure and thereby covered under the policy.

The best and safest course of action is for all property owners to obtain both property insurance and flood insurance – regardless of whether or not their structure is located in a flood zone.  If you ever find yourself in a dispute with your property insurance company as to whether your damage is covered under your insurance policy, it is best to seek the advice of an attorney who specializes in property insurance claim matters.

Hurricane WindsAs we watch Hurricane Danny approach the Gulf, it is hard to believe that 10 years have passed since Hurricane Charlie and three other storms caused massive damage and property insurance claims throughout Central Florida.  Although the passage of time makes it easy to think that such storm damage is unlikely to happen again, we are not immune from further visits from Mother Nature.

It is important to prepare for the eventuality of a hurricane strike now, instead of waiting until the winds begin to blow before getting your family and property ready for the storm.  First, make sure to map our your evacuation route so that if you are ordered to leave (or just want to), you already know where to go and how to get there.  Whether or not you plan to evaluate, it is crucial that you stock up on water, non-perishable foods, and power sources (batteries).  It is also important to have a reliable radio so that you can stay informed as to the storm’s progress and any evacuation instructions.  Don’t forget about your pet either, as many shelters do not allow animals and leaving Fido in the back yard is not a very good option.

Hopefully, long before the arrival of a hurricane or storm, you reviewed your policy of property insurance to verify the coverages that exist for damage caused by high winds and water.  Be aware that certain rules, exclusions and deductibles apply for damage caused by a hurricane or storm, so if you have any questions, it is advisable to seek the advice of a professional with experience handling such issues.

April-FoolNormally, April 1st is known for being the one day when you can pull pranks on friends and co-workers and still escape the beating that would normally follow on any other day.  By merely yelling, “April Fools!”, you can escape judgment for all sorts of sins and misdeeds – all in the name of “good fun”.

Unfortunately, this April Fools Day will hold special meaning to property insurance policy holders in Florida because, as of April 1, 2015, the Homeowner Flood Insurance Affordability Act of 2014 goes into effect.  As history has shown, anytime the Federal government passes a law with the word “Affordability” in the title, you know you are going to have to reach for your pocketbook.  The Homeowner Flood Insurance Affordability Act was passed last year to kick the can down the road with regard to sky rocketing flood insurance premiums under the Biggert-Waters Act, but it looks like “down the road” is now staring Floridians in the face.  Although the new premium increases won’t be as draconian as the $30,000 residential flood insurance premiums homeowners were facing under the Biggert-Waters Act, Floridians can still expect to see increases of approximately 18% annually until the premium charged for flood insurance coverage is “actuarially sound” (i.e., never).

But not to worry!   A local congressman just introduced a bill entitled the Flood Insurance Premium Parity Act of 2015.  Based on this lofty sounding title, the bill is sure to solve any and all problems and make flood insurance affordable for all in perpetuity.  See – nothing to worry about.

tornado-damage-floridaOver the last few days, Central Florida has been pounded by torrential rain, tornadoes and high winds.  These damaging windstorms and tornados were especially violent in Manatee, Sarasota, Lee, Hillsborough and Pinellas Counties.  These thunder storms caused flooding in Shore Acres, wind damage in Siesta Key, and claimed the lives of two people in Duette.  Now that the storms have past, we are left to deal with the damage done by this weather event.  Fortunately, most people have homeowners insurance to help pay for the damage to their property, but as we have often seen, going through the insurance claim process can be a world of heartache all its own.

After the storm or tornado has past and/or the flood waters have receded, you should immediately contact your insurance company and place them on notice of your claim.  The sooner you start the insurance claim process, the better chance all parties have of accurately calculating your damage and the cost to repair same. You should also take whatever ever steps you can to mitigate the damage caused to your property and otherwise take action to keep additional damage from occurring.  You should also, to the best of your ability, make a listing of the damaged property.  Although making a listing of your damaged property can be difficult – especially when the items are missing or totally destroyed – you are the best person to know the extent of your property.  If you can’t properly itemize your lost or damaged property, most likley the insurance company will not reimbuse you for same.

After a storm or other weather event, you may also have to deal with emergency restoration companies.  These companies will come to your house soon after the damage occurs and will do the immediate repairs or restoration that may be necessary to protect your home from further damage.  These services usually include the placement of large fans or other equipment to dry out your property, the installation of tarps over your damaged roof, or other similar activities.  Although these services can often be crucial for the protection of your property, always remember that these services are very expensive and that you only have a certain amount of money under your insurance policy limits with which to repair your home.  If large sums of your policy limits are spent on these initial emergency repairs, you run the risk of not having sufficient funds remaining to repair the remainder of your home.  Therefore, it is always important to obtain an agreed upon written estimate of the work prior to the performance of same.

Lastly, it is important to remember the difference between flood insurance and wind insurance.  Your normal policy of property insurance does not cover flood damage – meaning damage caused by “rising water”, but will only cover damage caused by water which was “blown into” your home by wind.  For instance, if your property was damaged by water that had been blown in through a window or a damaged roof, your normal homeowners policy would cover it.  If the damage was caused by water rising from a nearby creek, your homeowner’s policy would not cover the damage.  It is crucial that you understand the coverages available to you prior to authorizing any repair work to your home.  If you authorize a contractor to dry out your home after a flood and then realize that you do not have flood insurance – you will be on the hook to pay the contractor out of your own pocket!

As always, should you have any questions regarding what coverage may be available to you under your insurance policy, please feel free to contact our office and we will do our best to answer any questions you may have regarding your property damage claim.

 

By now, most Floridians have heard about – or even experienced – the incredible spike in flood insurance premiums that are coming their way due to the Biggert-Waters Flood Insurance Reform Act.  In short, the Biggert-Waters act is a new federal law which attempts to address a $24 billion dollar deficit in the coffers of the National Flood Insurance Program by raising flood insurance rates across the board.

Unfortunately, the slipshod manner by which this law was enacted is going to have a catastrophic affect on the economy of Florida and the financial future of many Floridians.  The Tampa Bay Times wrote just the other day about a Seminole couple who was looking down the barrel at a 900 percent increase in their flood insurance premium.  Contrary to the initial thoughts of many, Florida is not known for incurring large amounts of flood losses.  In fact, many studies have shown that Floridians have only received about $1 in claim payouts for every $4 that Floridians have paid into the federal flood insurance program.  Despite not having a large amount of historical claims, Florida does stand out as having the most overall flood policies issued – over 2 million policies and counting.  Because of the sheer number of these policies, Florida must bear the brunt of the steep rise in premiums.

But – even if the Feds have thrown Florida under the bus, help may be on the way from our Florida legislature.   State Senator Jeff Brandes of St. Petersburg has said that he is close to filing a bill that would encourage private insurance companies to offer flood insurance in Florida.  Normally, flood insurance is not provided under your normal homeowner’s insurance policy and must be purchased separately through the federal flood insurance program.  This new proposed legislation would encourage private insurance companies to offer an alternative to the federal flood coverage by making changes in the residential “surplus lines” insurance market.  In general, surplus lines insurance carriers are not as regulated as “normal” insurance carriers and are not subject to many of Florida’s laws and requirements (including rate regulation).  Lloyds of London, for instance, is a surplus lines carrier, as opposed to State Farm Florida Insurance Company, which is a “non-surplus lines” insurance company and therefore subject to the laws and regulations of Florida.

It has become clear that any relief for Florida property owners will have to come from reforms at the State level as opposed to waiting for the Federal government to take action.  Considering the large available market for the issuance of private flood insurance policies and the relatively low occurrence of flood claims, Florida may well turn out to be quite a profitable endeavor for a private insurance carrier willing to take on the risk.

 

Water DamageAlthough hurricanes, earthquakes, and sinkholes get the majority of the attention in the news, the vast majority of insurance claims deal with water damage to property.  These claims are generally broken into two categories – flood damage and water leak/seapage damage.  Flood claims revolve around damage caused by “rising water”, as opposed to other types of water losses which could come from leaky pipes, water blown through windows as the result of a storm, or overflow from appliances. 

With regard to the avoidance of damage caused by a flood – well, that’s between you and Mother Nature.  With regard to protecting your property from other types of water damage, you may find the following tips helpful: 

1.  Know the location of water valves.  Make sure everyone knows where the main valve is located and how to turn the water off.

2.  Monitor utility bills.  An unusually high water bill could signal a water leak.

3.  Turn off water before traveling.  Turn the water off at the main valve or directly on major appliances. Consider leaving a house key and contact information with a neighbor or trusted friend and ask the person to check the inside and outside of your home periodically while you are away

4.  Inspect your home regularly for signs and sources of moisture.   After a storm or rain shower, check for water stains or odors inside your house.  Create a maintenance schedule to check the following sources of water leaks on a regular basis:

Hot water heaters – Hot water heaters may rust or develop cracks over time. Check your water heater for rust and deterioration every year. Check the drain pan for water and ensure that the drain line for the overflow pan is not clogged. Drain and clean the water heater as recommended by the manufacturer.

Garbage disposal – Routinely check for cracks or other sources of leaks.

A/C drain lines – Damage can occur when the line that drains condensation from the evaporator coils becomes clogged and water overflows from the drip pan. Periodically check the drip pan for water and consider an annual service call to reduce the buildup of algae and mold in the drain line.

Indoor and outdoor pipes and faucets – Routinely check indoor pipes under cabinets and sinks for leaks, rust, and any signs of deterioration. Minimize the potential for water damage from frozen and broken outdoor pipes by insulating supply lines (in attics, crawlspaces, and exterior walls), protecting exposed outdoor faucets, sealing gaps in exterior walls, and maintaining adequate heat in your home.

Appliance hoses – Broken hoses are among the most common causes of water damage. Regularly inspect hoses and hose fittings on washing machines, icemakers, and dishwashers for kinks, cracks, bulges, or deterioration. Replace standard rubber washing machine hoses every two to five years or more often if they are showing signs of wear. Consider using steel-reinforced hoses for longer life.

Showers, tubs, sinks, toilets, windows, and doors – Water leaks around bathtubs, showers, sinks, and toilets can cause damage because the leak is often out of sight. To prevent leaks, make sure you have a watertight seal of caulk around tubs, sinks, toilets, tubs, shower stalls, windows, and doors. Cracks or mold on caulk or tile grout may indicate that you do not have a watertight seal. Remove all caulk or grout, clean and dry the surface thoroughly, and apply fresh caulk. Do not apply new caulk or grout on top of the old materials.

Attics and ceilings – Routinely check for wet insulation and water stains.

Wallpaper – Routinely check for bubbling, peeling, and stains.

Roofs – Keep roofs free of debris that can damage roofing and allow water to seep in. Trim tree branches to prevent them from rubbing and damaging the roof.

Repair missing or damaged shingles – Properly seal any cracks around chimneys, skylights, and vents. Check metal flashing for holes, cracks, or other damage. Replace flashing or use silicone caulk to seal any openings.

Rain gutters and downspouts – Direct rainwater away from your home. Keep gutters clear and make sure downspouts are long enough to carry water away from your foundation. Gutters that are filled with leaves and other debris allow water to back up on the roof, which can result in water damage to eaves and roofing material.

Sump pumps – Sump pumps are the first line of defense in preventing water from seeping into basements. Periodically check the sump and remove any debris that could clog the pump. Consider installing a battery-powered backup to protect your basement during power outages.

Landscape – Yards should slope away from the house to prevent puddling near the foundation or under pier and beam houses. Do not allow sprinklers or sprinkler heads to soak the exterior of your house.

Trust me – with regard to water damage, an ounce of prevention is worth a pound of cure.  A few years ago, we had a water leak at our house that resulted in our being out of the home for over 77 nights!  One tiny valve behind a toilet in my daughter’s bathroom broke free while we were on vacation and the resultant leak destroyed the hardwood flooring throughout our entire house and even seeped up the walls for approximately three feet!  Even with the best preparations, accidents may be unavoidable.  Therefore, it is vitally important that you verify that you have sufficient coverage on your homeowner’s insurance policy to protect you from water damage.  If you have any questions regarding your insurance policy or what coverages it may provide, you should contact an insurance claim lawyer to examine your policy and explain what benefits your policy may provide for this type of loss.

Pursuant to a new Federal law, premiums for residential flood insurance in Florida may soon be as high as $24,000 a year.  A new law, the Biggert-Waters Flood Insurance Reform Act, was enacted by Congress in 2012 as a knee jerk reaction to the recent large scale disasters such as hurricanes Katrina and Sandy.  Proponents of the new law stated that the passage of this law was necessary in order to make the federal flood insurance “fiscally sound”. 

People who bought homes in high-risk areas after the law was passed in July 2012 may have received the same flood insurance rates as the previous owners.  When these new owners renew their flood insurance policies, they will be required to get an elevation certificate – which will most likely cause the amount they pay for flood insurance to explode.  Much of the potential rate increase will be tied to the height of the home’s foundation as opposed to the base flood level.  It is speculated that a home at 3 feet below the base flood elevation may see rates increase to approximately $6,500 per year, and a home at 6 feet below the base flood elevation level may see a rate of $15,000 per year.  Oh – and remember that coverage limits for federal flood insurance is capped at $250,000 – regardless of the value of your home.

An article in the St. Pete Times today pointed out two specific examples of how this new law will affect Pinellas County residents.  In one example, a home was built in 1960 and was purchased in March of this year for $148,000.  Since this home is 7 feet below the base elevation, its annual flood insurance premium will soon be $22,400.  Another example was a 1956 home which is 8 feet below the base flood level.  This homeowner now pays $1,960 for his flood insurance, but next year his premium will be $29,100.  As a general rule, current property owners in the “A” flood zone who are now paying approximately $2,000 a year for flood insurance will see their premiums jump 25% in October of this year, and these premiums will continue to rise over the next eight years to approximately $11,000 per year.

Clearly, the Biggert-Waters Flood Insurance Reform Act will be catestrophic to the real estate market in Florida and beyond.  As for prospective purchasers of waterfront property in Florida, make sure you know what you are getting into as it appears that the days of affordable flood insurance are in the rear view mirror.

Here in Florida, we tend to think that we have the exclusive right to complain about Flood Insurance and the rising premiums that go with it.  Unfortunately, flood insurance and ever increasing premiums are a problem not only in other states, but in other countries as well.

For example, a recent article in the Tampa Tribune pointed out that payouts for flood insurance claims from a single event in Germany would soon top 4 billion dollars (not a misprint – that is billion with a “b”!)  Over the past week, heavy rains in Germany, the Czech Republic, Austria, Slovakia and Hungary have cause extensive overflows of the Elbe, Danube and other rivers throughout the area.  Insurance costs in Germany alone are estimated to run over 3 billion dollars. 

But those shocking facts are not even the real story.  The real story is that the total damage caused by this flood is estimated to be over 16 billion dollars!   Why the huge difference between the estimated insurance claim payouts and the total estimated damage?  The problem is that many residents have been unable to obtain insurance coverage for this hazard due to insurance companies refusing to issue such policies in the area.  Even those who might actually be able to obtain such coverage, were not able to purchase same due to the prohibitively high cost demanded by the insurance carriers! 

Unfortunately, the net result of this situation is that there are a lot of people out there with damaged or destroyed property (to the tune of 12 billion dollars!) and there will be no insurance or other funds available to assist them with the repair of their property or replacement of their personal items.  Although it may be impossible to see into the future, you can always prepare for the future.  Therefore, check your insurance policies today to make sure you have the appropriate amount and type of insurance.  Although your flood insurance premiums may seem high, the cost of such insurance pales in comparison to the cost of replacing your property and personal items.