North Texas Dentistry Volume 8 Issue 3 2018 ISSUE 3 DE - Page 36

insurance update Anywhere it can rain, it can flood! by Kyle Wallace H ere in Texas, it is hurricane season... again! Every year between June 1st and November 30th we Texans prepare to batten down the hatches paying particular attention to late August through the month of September, the height of the season. For those of us that work with property insurance that means dealing with potential wind and flood damage. Wind damage because the common com- mercial and residential insurance policies we sell cover it and flood damage because those very same policies don’t. That’s right, the policies that insure your house and your office don’t cover flood damage. Like it or not, insurance companies are businesses and they cannot turn a profit including flood cover- age on these policies. That says a lot! You might think, so what, I don’t live on the coast. Well, here are some facts you might want to consider. Floods are the num- ber one natural disaster in the United States. Floods occur in all 50 states and more than 20% of all flood insurance claims come from outside the mapped high-risk flood zones. Rains associ- ated with hurricane activity often lead to flooding hundreds of miles inland. No one can really say for certain where it will or won’t flood, because the reality is anywhere it can rain, it can flood. With regard to insurance terminology, flood has a specific meaning. So let me start by telling you what a flood is not. If a water pipe breaks in your home or office, you might have a mess but you don’t have a flood. The same holds true if a storm rips a hole in your roof and your home or office fills with rain. In these examples, you do have water damage but you also have coverage under the common commercial or residential property 36 NORTH TEXAS DENTISTRY | policy. In the insurance world, Flood is characterized as rising water. Google a definition of flood and you’ll find reference to an overflowing of a large amount of water beyond its normal confines, especially over what is normally dry land. The National Flood Insurance Program (we’ll be getting to this) adds to this definition; a general or temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow. So what is the National Flood Insurance Program (NFIP)? In simple terms, it’s a federal government program that serves as the primary source of flood insurance for the general public and the only source for properties located in the higher risk areas. It’s sold by insurance agents like me and the policies themselves are often provided thru third party insurance companies you might have heard of but the claims themselves are paid by the NFIP, the federal government. As you might expect, there are differences between flood insur- ance and the other types of property insurance you might pur- chase. For example, homeowners insurance automatically covers both the dwelling and personal property. You can do this with a flood policy too but unlike homeowners insurance, the NFIP gives you the option of including contents. Under the flood policy, the home or dwelling itself can be insured for replacement cost as long as you insure to at least 80% of the replacement cost value of the home but all personal property (contents) claims are paid at actual cash value. That means if you choose to insure contents, any settlement paid to you will be based on the depreciated value of the damaged contents. This holds true for commercial flood insurance as well. This is