What is the difference between a flood insurance claim and a water damage claim on a homeowner’s insurance policy in Florida?

This is question we get all the time from our clients. “I had water damage to my home. Should I file a claim under my homeowner’s insurance policy or under my flood insurance policy?” The answer is important because water damage losses are very expensive, unanticipated, and could be excluded if you have the wrong policy.

Water damage coverage on a homeowner’s policy

The typical homeowner’s policy form (HO-3, Special Form) covers all risks of direct physical loss to your home including water damage, but with significant exclusions and limitations. Generally speaking, your homeowners policy will pay for “sudden and accidental water damage” from inside your home. It generally does NOT cover losses caused by water that rises from the ground and comes in from the outside. (A breach of the roof or wall by wind with water entering is covered.) A good rule of thumb to remember is: where the water originated will ultimately determine whether there is coverage on your homeowner’s insurance policy.

Under a homeowner’s policy, water damage is a covered loss when it is caused by leakage of an inside water pipe (behind a wall or under a sink) or caused by leakage from an appliance (hot water heater, washing machine or dishwasher).

In all cases of a covered loss, the property deductible applies.

Interesting caveat: The expense of repairing damage caused by water is covered by the homeowner’s policy; however, the policy does NOT pay for repair of the faulty item, such as the hot water heater or the water pipe. Damage to the item which was compromised because of old age, erosion, or defective materials or construction, is never part of a covered loss. The policy will pay to access the damage, such as cutting a hole in the wall to reach a broken pipe and then repairing the cut in the wall.

Water damage on a flood insurance policy

Flood insurance is responsible for covering water damage to your home caused from the outside. The National Flood Insurance Program defines flood as follows: A flood is a general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow.

Remember that if it rains in Florida, it can flood in Florida. Any time you enter the State of Florida you enter a flood zone! Besides rain, other conditions can cause flooding: hurricanes and tropical storms, broken levees, and clogged or faulty drainage systems.

Just because we in Florida have not experienced a flood recently does not mean that we will not in the future. Flood risk isn’t just based on history. It is also based on a number of factors such as rainfall, tidal surges, topography, flood-control precautions and changes due to building and development. Even development in another city in Florida can create flooding in our area.

The government has made flood-hazard maps to show the risk of flooding in different areas of the community. This map partially determines the cost of flood insurance based on the flood zone. Obviously, the lower the degree of risk, the lower the cost of flood insurance.

John Gracey Backer, CPA
John Gracey Backer, CPA

John Gracey Backer, CPA, is the Treasurer of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Malpractice, Professional and Personal Insurance for the Healthcare Provider. He can be contacted at (561) 404-5828, or at john@gbifl.com.

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