Does Homeowners’ Insurance Cover Flooding?

February 23, 2009


Cleaning a Flooded Basement is Expensive and Not Fun

Cleaning a Flooded Basement is Expensive and Definitely Not Fun

A week of record high temperatures in early spring cause rapidly melting snow to overflow a stream located in the backyard of a home in Chicago. The exterior drain of the home backs up and allows water to enter the finished basement, resulting in flood damage. The water causes a crack in the foundation and damage to the wood flooring, built-in cabinetry, wet bar, area rugs, furniture and the electronics of the home theater system. Collectibles as well as a computer for a home-based business are ruined. The home?s older electrical wiring needs to be replaced to comply with Chicago ordinances.

Homeowners’ Insurance Does Not Cover Flood

The answer, for many residents in Chicago, is unfortunately NO. Flood damage is not covered by a standard homeowners policy. It must be purchased separately from a licensed agent.

Most people do not purchase flood insurance for the simple fact that they believe they are not at risk?because they live in Chicago. And, at first blush this appears reasonable.  People obviously think about it. Over the years I’ve heard many reasons for not buying it, ? I had two sump pumps installed,? ?My house is brand new, its water tight,? ? I live in a duplex down condo unit, so my association will cover me.?

Over 30% of All Flood Claims Come from Areas with Minimal Risk.

Flood insurance is defined as, ?a general and temporary condition of partial or complete inundation or two or more acres of normally dry land or two or more properties from one of the following: Overflow of inland or tidal waters; mudflow; collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or unusual and rapid accumulation of runoff or surface waters from any source.?

In Chicago, we experience the unusual and rapid accumulation of water quite often, starting in the fall with the leaves clogging the sewers to the violent temperature swings during the winter.

Until recently, flood insurance was only available from the federal government via the National Flood Insurance Program (NFIP). A few select carriers have now designed their own personal flood insurance policies to address the gaps in the NFIP system:

  • Personal flood insurance covers flood loss even if the flood is confined to just the one insured property. NFIP covers only if two or more properties have been affected.
  • Personal flood insurance insures a home and its contents up to a total of $15,000,000. NFIP provides a maximum limit of $250,000 of coverage for the dwelling and $100,000 for contents.
  • Personal flood insurance includes a minimum of $15,000 of coverage for contents in a basement and minimum $30,000 of coverage for real property in a basement. NFIP does not cover this type of damage.
  • Personal flood insurance covers additional living expenses, like meals and lodging, if you can’t live in your home. NFIP does not.

The average flood insurance premium is $350 per year. It is worth the investment. Just ask your friends and neighbors who lived in Albany Park last fall.

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About Michael Rice

Michael Rice is an insurance broker at Thomas Ward Insurance Group in Lincoln Park. He started working in the insurance industry in 1993, with Thomas Ward, as the city's first American Family Insurance agents. After a few very successful years at American Family, he realized that to be truly successful he needed to be able to provide his clients more than a "cookie-cutter" approach to insurance ? one company can not solve every clients needs. So, in 1999 he and Tom took the chance and opened up their own independent insurance brokerage and have never looked back. He now represents some of the countries top ranked insurance carriers. Michael resides in Chicago, IL with his gorgeous wife and three boys. You can reach him at Visit his website at

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