Posts Tagged ‘El Nino’


Flood Damage Not Covered by Insurance

Wednesday, August 24th, 2016
Share

The devastating floods being shown on TV are often accompanied by this voiceover:

“And most of these people have no flood insurance.”

flood damageWhen you see the piles of ruined possessions out on the curb, as in the photo, you get a better idea of what “no insurance” really means. And, I hope, you are prompted to take another look at your own insurance coverages.

After all, it seems as though in the last 12 months we have seen multiple floods labeled “thousand year floods,” so even if you have never been flooded before it’s possible you’ll experience one for the very first time. And it could be any time.

Last year we were threatened by unusual rain from El Niño, so I took a closer look at flood insurance. Here’s some of what I found out about it.

Of course, you should check with your own insurance agent to confirm how YOUR home fits into the world of insurance coverage. Questions to ask:

What does my Homeowner’s Insurance cover?

Your standard homeowner’s policy doesn’t cover flood damage at all. It may cover some water damage from rain coming through a hole in the roof punched in by a storm, but if rising waters fill the house, you are out of luck.

Do I have to live in a flood plain to get flood insurance?

Well first, do you know if you even live in a flood plain?

Find out by going to FEMA’s map service at https://msc.fema.gov/portal 

If you do live in a flood plain, obviously flood insurance will cost more because the chances are higher that there will be a claim. (If you have been required to obtain flood insurance as part of a mortgage, the map can be a good “second opinion.”)

The fact is, though, that something like 1 in 4 claims is for a home not on a flood plain. So this shouldn’t be your deciding factor.

And, to answer the question, anyone can get flood insurance, flood plain or not.

Where do I get flood insurance?

Start by checking with your current home insurer. Some of them have flood insurance available, as a separate policy. Most will refer you directly to the National Flood Insurance Program, administered by FEMA. NFIP was set up in back in the 60s, and it has been updated regularly so be sure you check for the latest limits and costs.

How does NFIP work?

Like all insurance programs, the NFIP must be financially sound, so its policies are priced based on the likelihood of a claim (“Are you in a flood plain?”) plus the amount of coverage selected by the homeowner – whether for the building, the contents, or both.

Does the NFIP have maximum limits?

Yes. (That’s why I included that question here!)

While limits have increased over the years, and coverage has been refined, there are distinct features to the policy. You will need to watch for:

  • Maximum for the structure – currently $250,000
  • Maximum for possessions – currently $100,000

If you have a more expensive home, you can get “excess flood insurance.” You’ll get it from a private carrier, and it will function rather like “a flood policy with a $250,000 deductible!”

What is covered by NFIP?

According to the Insurance Information Institute, “Flood insurance covers direct physical losses by flood and losses resulting from flood-related erosion caused by heavy or prolonged rain, coastal storm surge, snow melt, blocked storm drainage systems, levee dam failure or other similar causes. To be considered a flood, waters must cover at least two acres or affect two properties.”

Note that last sentence. An overflowing storm drain just in front of your house might not count!

What isn’t covered?

Read the following exceptions carefully, and confirm whether they apply in your case.

  • First, flood insurance doesn’t cover that build-out to your basement (although it may cover some of the air conditioning or heating systems) or anything you may have stored down there. No basement coverage!
  • Second, it may pay replacement cost for your home, but it will only pay “current value” on possessions. This means the family “heirlooms” may be worth almost nothing as far as insurance coverage is concerned.
  • Third, this insurance doesn’t help cover living expenses during the time your home is being rebuilt.

And while I hesitate to say it, you may find that the way your insurer defines “not covered” is likely to be confusing and/or downright misleading. You need to become your own expert.

Should I get flood insurance?

I’m not going to recommend one way or another, but I would certainly consider it. The average price is somewhere around $600 a year for maximum coverage. (I looked into it for our house here in Southern California, built in what is essentially a desert landscape. Our quote was $371/year.)

What else should I know?

Here I WILL make some recommendations.

  1. Be sure to maintain your house whether or not you get a flood policy. Some water damage coverage on your current homeowners policy may be denied if you haven’t installed or maintained gutters, kept up with roof repairs, etc.
  2. No matter what kind of insurance you carry on your home and/or possessions, charge up your phone and do a deliberate walk through, video-taping the contents of every room. Having this record will be incredibly valuable in helping you remember what is missing or damaged in any kind of emergency. Put the footage on a flash drive and store it with a family member or at work, somewhere “off site.”
  3. If you are thinking to wait until the “real” rainy season hits before you buy flood insurance, remember that there is a 30 day waiting period after you sign up before the coverage goes into effect.

Finally, as with all insurances, I recommend you get at least two quotes. Flood coverage, just like earthquake coverage, is something the average insurance professional may not be experienced with. You need to become your own expert – after all, it’s your house we’re talking about!

Virginia
Your Emergency Plan Guide Team

P.S. I can hear some of our readers saying, “Heck, I know all this.” If that’s your case, how about forwarding the article to a family member or friend who might NOT know it all!  Thanks!

P.P.S. And if you haven’t already, subscribe to our Advisories below. Just let us know where to send them. You never know when one will come that has some new information perfect for you that week!

 

 

 

 

Power Outage At Work

Sunday, December 20th, 2015
Share

Some statistics for small business.

No Business PlanYou’ve seen the stats here before. Check out numbers from a June 2015 Nationwide Insurance survey:

  • 75% of small business owners say they don’t have a disaster plan. (This is UP from the 72% we’ve quoted before!)
  • 38% don’t even think a disaster plan is important.
  • Unfortunately, a business without a plan has a poor chance of recovery after a disaster. FEMA reports that 43% of them will never reopen, and another 25% will close their doors after one year. That means that after a disaster, nearly three-quarters of businesses without a plan will be gone.

Who knows what the numbers will tell us after the recent one-two-three punch from Hurricanes Harvey, Irma and Maria!

No matter what the exact numbers are, operating without a plan leaves your customers in the cold, your employees without a job, and your investment down the tubes.

If you don’t already have a plan, what might spur you to action? Consider this . . .

Let’s take a look at just one risk that you are surely familiar with.

One company we follow is Agility Recovery. As its name suggests the company offers recovery solutions – four main ones (office space, power, communications, computer systems).

In its 25 years of business, Agility has responded to one type of emergency more than twice as often as any other —

Loss of power!

Further, according to Agility Recovery,

  • Nearly 70% of businesses will lose power sometime in the next 12 months.

So, where does your company stand on being ready to withstand a power outage?

“Well, I think we have a back-up generator on premises!”

That’s a start. Again, thanks to some resources offered by Agility Recovery, Popular Mechanics and The Home Depot, here are

Ten questions for your next conversation about power outages at work.

  1. Do employees have emergency kits with flashlights? Are the batteries fresh? Are the flashlights hand-crank?
  2. Do you have emergency radios so you can get the news and weather? Again, fresh batteries, hand-crank or solar?
  3. Are electronics protected by a power strip surge protector?
  4. Do employees know what should be turned off in a power outage, and what should be left on?
  5. Are desktop electronics connected to a functioning UPS device so they can be powered down in a controlled fashion?
  6. Do you have a back-up generator for essential equipment?
  7. Do you know what equipment is considered “essential” and are you confident the generator can both START and RUN that equipment? (It takes 3 to 5 times more power to start up a motor than to run it.)
  8. Have you trained on where to place the generator when it is needed?
  9. Do you have the appropriate electrical cords and plugs for your needs? How long do cables need to be?
  10. Do you have fuel for the generator? How long will it last, and what are the plans for getting more?

Get the rest of the questions and answers.

These ten questions are really just a start. Any business other than a home office needs more information in order to do a good job of managing a power outage. You can get a more detailed checklist, plus see some of the case histories offered by Agility Recovery, at their resource library: https://www.agilityrecovery.com/resource-library/

Power outages are on the horizon, it’s just a matter of when.

Good luck!

Virginia
Your Emergency Plan Guide Team