How Does Flood Insurance Work

flood insuranceThe recent flooding in the UK left a lot of homes and properties damaged. But some residents are finding it difficult to move on with their lives especially with the issue of insurance renewals hanging over their heads.

A particular news item brought this issue to my attention. Apparently, a couple in Worcester got their homes flooded when River Severn overflew. The couple’s living room and downstairs bathroom were overwhelmed by flood waters late last month. Now the couple was scheduled to renew their policy a week after their home got flooded.

It was not surprising that the insurance company would be increasing its excess but the couple was quite shocked to hear from the insurance company that their home insurance grew from £50 to £10,000 due to the floods. Moreover, the renewal contract states their home will not be covered unless they set up temporary flood barriers. Fortunately for the couple, and probably with the help of the story being publicized and broadcasted in popular media, the insurance company took a second look at their policy and decided to reduce the amount to £1,000.

A good home insurance can help you stand up on your own feet again even after experiencing such natural tragedies like floods. When it comes to insurance policies, there are only two kinds of insurance that can cover the losses and damages due to floods. First is the homeowners’ insurance policy and the second is the flood insurance policy. Each one can back the other when it comes to covering losses and damages. If it is not covered by your homeowners’ insurance, it should be covered by your flood insurance and vice versa.

The coverage of flood insurance policies depend on the policy limit. However, insurance policies distinguish flood damage from any other water damage by adhering to a strict definition of floods. Insurance companies define floods as the "rising and overflowing of a body of water into normally dry land." They give emphasis to the word "rising"and use it as a major element to determine if a particular home was damaged by flood waters or not. Also, another prerequisite is that flood damage should not be isolated to your house but also have affected the nearby houses as well.

Insurance policies include in their floods list the various river overflows, seeping of surface water caused by heavy rain into basements or ground floor areas, and mud slides caused by heavy rains or flash floods.

Meanwhile, a homeowners insurance policy does not insure your homes from damages caused by flooding. It does, however, cover damages caused by other water related incidents. Such incidents include hailstorms breaking windows allowing hail and rain to enter the house causing considerable damage to the house’s fixtures, water damage from rain soaking through the roof, and damage from broken water pipes causing water damage to your home.

Please note that flood insurance does not replace your homeowners insurance policy. It is there to complement your existing homeowners insurance.

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