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 | www.northtexasdentistry.com
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