Your House Has Leaky Umbrella : Homeowner’s Policy Is Limited; You May Need Flood Insurance

The wettest January in Los Angeles-area history took a toll on Kathleen Walsh’s home. The Temple City resident discovered brown spots and mildew on her newly plastered ceiling. Walls in a recently remodeled section of her house buckled, and the carpet molded. Even some paintings got soggy. Walsh’s home sustained about $11,000 in damage, her insurance agent estimates.

Walsh is reasonably lucky because the bulk of her damage claims will be covered by her homeowner’s insurance. But many other consumers aren’t so fortunate.

Insurers say that thousands of homeowners are learning the hard way that not all water damage claims are covered through homeowner’s insurance. Indeed, what’s often the most costly type of claim--that from a “rising tide of water”--is generally not covered unless you purchased flood insurance.

Flood insurance, which protects your home and valuables against loss from overflowing balconies, rivers, streams, oceans and landslides, has been readily available since 1969. However, few homeowners buy it--even when they’ve been told that they are in a high-risk flood area.

“Approximately 75% of the buildings in special flood hazard areas do not have flood insurance,” says Jack Eldridge, chief of the flood insurance program for the Federal Emergency Management Agency in San Francisco. An even smaller percentage of homes outside of these designated high-risk areas carry flood insurance. Yet one-third of all the flood claims come from individuals and companies in these lower-risk locales, Eldridge adds.

In this unusually wet year, that means tens of thousands of consumers will be paying for millions of dollars in flood losses out of their own pockets, federal disaster management officials say.

Part of the reason so few individuals buy flood insurance is because many people mistakenly assume that flood damage is covered by their basic homeowner’s insurance policy. But that’s rarely true. The standard homeowner’s policy covers you for fire, theft and damage from “wind-driven rain.”

Temple City resident Walsh was covered by homeowner’s insurance because the damage to her home mainly came from a roof made leaky by violent wind and rain. Others, who have found their basements, garages and family rooms flooded simply because water has saturated the neighborhood find they are only covered if they’ve purchased flood insurance.

And flood coverage isn’t cheap.

A $100,000 structure-only flood policy costs at least $200 annually if you’re in a low-risk area and your property is properly elevated, Eldridge notes. If you’re in a higher-risk area, your coverage could run $400 or more. And if you built your home in violation of the building code in a “special flood hazard area,” flood insurance could cost you more than $1,000 annually. In addition, you must pay a $70 annual flood insurance fee that’s tacked onto each policy.

If you want to insure the contents of your house--furniture, paintings, electronics and so on--the cost jumps again. In a low-risk area, an additional $60,000 in contents coverage would run about $114, specialists say.

Although flood insurance is underwritten by the federal government, it is administered by private insurers. If you want it, you usually can buy it through your regular insurer, and the cost will be tacked onto your homeowner’s insurance premium. When you have a claim, you would contact your insurance agent, just like you would for any other insured claim.

What’s covered by your average homeowner’s policy and what’s covered through the flood program?

Different insurers’ policies vary a bit, but the standard homeowner’s policy insures against just “wind-driven rain.” If shingles blow off your roof during a storm and you sustain water damage as a result, it’s covered. If a branch or tree falls on your roof or in a window during a storm, the breakage and water damage is also covered. If your house becomes uninhabitable because of a storm, flood or fire, you’ll usually be compensated under the “loss of use” clause in your standard policy.

Your landscaping is not covered. Your insurer will generally not pay to have your fallen tree repaired--they’ll just pay to get it taken off your roof. If the begonias are decimated, you’ll have to replace them out of your own pocket. Landscaping is also not covered on a flood insurance policy. Insurers say landscaping gets hit too frequently to insure without charging exorbitant premiums.

A structure-only flood policy will pay for damage to your walls, floors and wall-to-wall carpeting from a “rising tide of water.” Built-in appliances are covered. Built-in heating and air-conditioning systems are covered--anything that’s attached to the walls or beams of your home, Eldridge says.

The rugs on your finished floor are not covered. Nor are your paintings, furniture or antiques. If you add a “contents” rider to your flood policy, your clothes, furniture and other contents are covered, up to set limits.

However, both flood insurance and regular homeowner’s policies have some limitations. The first and most obvious is they both have deductibles. Typical home and flood policy deductibles range between $250 and $500. And many people save a few dollars on premiums by opting for higher deductibles. If you have both flood and wind-driven rain damage, you’d have to pay deductibles on both policies before getting compensated for your losses under each type of coverage.

In addition, standard policies pay for average losses. If you have unusually expensive jewelry, mink coats, computer equipment or other costly items in your home, check to see if they would be fully covered in a disaster. To be covered, such items often must be specifically added onto a policy--at additional cost.

Is Flood Insurance For You?

Here are some steps in determining if you need flood insurance:

Determine if you’re in a “special flood hazard area.” The Federal Emergency Management Agency constructs flood maps, which are available at county or city planning commission offices in cities that are part of the flood insurance program. Take a street map with you when you look; it makes the flood maps easier to read.

Consider the location of your home. Even if you aren’t in a special flood hazard zone, you could be at risk of flooding if you’re in or near newly developed buildings and houses, flood experts say. That’s because the flood maps are updated only once every seven years or so, and the flood characteristics of developed areas are different than undeveloped areas.

How close are you to the Los Angeles River? Flood maps in the L.A. River Basin are in the process of being updated, because emergency management officials believe that this area is at much greater risk than once believed. If you buy now before the new maps are approved, you get the low-risk rate locked in for 10 years, says Craig Dixson, supervising underwriting officer at the California Department of Insurance. If you wait and have to buy flood insurance later, it is likely your rate will be twice as high.

Most California insurance agents are licensed to sell flood insurance. However, if you have trouble finding coverage, call the state Insurance Department’s help line at (800) 927-HELP.