"I thought it was covered under my homeowners' insurance policy." This is a repeating refrain from people whose property gets damaged by water or mold after a flood. Unfortunately, that common misconception means many aren't covered when a storm hits and the waters rise. A separate flood insurance policy is what's needed to protect homeowners from the kinds of losses they experience after a flood.
And according to several accounts, flooding claims are only likely to increase, as global warming has been projected to push sea levels up six feet by 2100. This could mean hundreds of billions of dollars in losses for coastal homeowners, and significant costs to insurers.
Even when homeowners do have flood insurance, they may not fully realize what it does (and does not) cover. For example, flood insurance does not cover:
- Mold, moisture or mildew damage that the property owner could have prevented
- Loss of important papers
- Loss of property that is technically outside the insured property. This includes outbuildings, decks, patios and swimming pools
- The cost of temporary housing
- Losses resulting from interruptions to business
While many don't know enough about flooding insurance, unfortunately there are also those who know just enough to try to take advantage of the system in a genuine time of need. Insurance professionals must remain on the alert for these people making fraudulent claims, as well.
As hurricane season continues in Louisiana, there are bound to be claimants of both types trying their luck. As the globe continues to warm, will more homeowners become savvy about the dangers and costs of living on the coast? Will insurance adjusters become better at spotting potential fraud?