It pays to know your insurance policy

Published 9:08 pm Friday, November 13, 2009

It turns streets into rivers, it overflows gutters and sewers, it fills up your basement and drenches your spirit.

When the rain starts and it seems like it is never going to stop, most homeowners are comforted by knowing they have homeowners insurance — until the rain stops and they call their insurer and discover that flood is not covered under their policy.

There is no homeowners insurance policy issued in the United States that covers flood damage. Flood insurance is available only through the National Flood Insurance Program. As an adjuster, after a heavy rain or series of heavy rains causes damage to a home that isn’t covered, I’m always asked in an irritated tone, “What is covered?”

When it comes to rain and what is covered by a standard homeowners policy, there is a simple rule: If it touches the ground, it’s out of bounds. Once water has reached the surface of the ground, it is not covered, whether it seeps through basement walls or basement flooring, or overflows at a window well.

If water enters a home around a chimney, an above ground-level wall, door or window and causes damage to drywall or plaster, paint or other building item, it’s covered. (Personal property items, however, would not be covered, unless wind or falling tree limbs or other covered perils create a physical opening that causes water, snow or ice to enter a home.)

There is one and only one exception to the “if it touches the ground, it’s out of bounds” rule, though it is an optional coverage that most homeowners either aren’t aware of it or refuse to buy when the policy is issued.

This coverage is called Sewer Backup and Sump Pump Overflow, and it provides limited protection against surface water that enters a house through the sewer drains or when water overflows from the sump pump well (also called a sump pump crock) and causes damage. This can include water damage to a basement or above ground-level areas when water spouts from a bath or sink drain or even a toilet.

Like everything else with homeowners insurance, there are limitations and exceptions even to this coverage. Most insurers put strict dollar limits on the amount of coverage they will provide. If you have this coverage, the amount will be listed in the Declarations page of your most recent policy renewal. This type of coverage also has a separate deductible that may be different from the “normal” policy deductible.

Some policies cover only structural items and not personal property items; some cover both, with the policy limit applying to building and contents combined; some have separate coverage amounts for building items and personal property.

The exception to this coverage is concurrent loss, when water backs up from the sewer or the sump pump overflows and ground water or subsurface water also enters a home in a way that is not covered, such as the aforementioned seepage through basement walls or floors.

The good news for homeowners is that most of the time it is impossible to discern how water enters a home (especially if there is several inches or several feet of water) and the homeowner is normally given the benefit of the doubt. The phrase “Don’t ask, don’t tell” applies to this type of damage.

After a covered sewer backup or sump pump overflow occurs, insurers often will suggest you have a restoration or remediation company extract any remaining water or moisture. While most companies do an outstanding job, homeowners must keep in mind that any and all work performed for a sewer backup/sump pump overflow loss applies to the coverage limit and most restoration or remediation companies do not work cheap.

For homeowners adventurous enough to tackle the work themselves, a homeowner can actually claim the hours he and members of his family spend to do the work and have that amount added to the claim. Regardless who does the cleanup use a germicide or fungicide on any area exposed to water to reduce or prevent the growth of mold.