by Ed Sneineh, Illinois Flood Insurance Licensed Agent
Hurricane Irene is providing a sore token that most of homeowners insurance policies do not cover damage from flooding. That's a painful reality for the people who spent their weekend cleaning up flooded basements, cursing failed sump pumps, or fixing other water damages on the East Coast.
Water damage is normally covered under the standard Homeowners insurance policy, the HO3, provided by the Insurance Service Office. When the roof of the house is damaged because of sever wind storm with water damaging your personal property inside your insurance company will pay for that.
Flood, on the other hand, is one of the catastrophic risks that standard homeowners insurance policies will not covered. Just like war, earthquake, hurricanes and other catastrophic risks, insurance companies specifically exclude them from standard coverage. Flood coverage is offered through the Federal Emergency Management Agency (FEMA). FEMA has a specialized department that deals with flood coverage known as the National Flood Insurance Program or NFIP. People and business who have exposure to flood can get the coverage and pay for it directly with the NFIP or private insurance companies that market the flood coverage. Not all insurers do market flood insurance.
Covering water damage depends where it came from. Water damage resulting from backup of sewer is not covered under the standard HO3 homeowners policy, but can easily be covered through a rider. Water damage resulting from rising water is not covered at all.
Whether water damage is covered depends on how it came about. Standard homeowners policies cover structural and water damage when wind or a falling tree knocks a hole in a roof, or breaks a window, allowing rain to fall inside. But there's generally no coverage for the home itself, or for personal belongings, when damage results from rising water. That includes water that seeps up from saturated ground through a basement floor, and homes near beaches flooded by storm surges.
In the case of Hurricane Irene flood damage was greater than wind, and there was no coverage for people who just took the regular standard policy.
While the Chicago area and the rest of the State of Illinois are not a hurricane region the fact that the State has many water bodies, rivers, springs, etc. make it a potential target for flood. Normally banks and lienholders will not approve any mortgage for properties located in flood zones without flood coverage. Flood Insurance for Illinois Homeowners and other property owners can be purchased through any licensed agent.
Illinois flood insurance rates vary based on distance of the property from a potentially flooding water body, elevation of the property, type of property including its age and construction type, and amounts of coverage.