FEMA for Floodies

OK, so your insurance company has canceled your backup of sewer and sump pump coverage. Now what do you do? Well, you could convert your basement into an outdoor patio, or you could ask your insurance agent for a quote on a flood insurance policy, which will provide at least some basic coverage for you if you experience overland flooding. The Federal Emergency Management Agency (FEMA) determines the premium rates and coverage limits for flood insurance policies. FEMA does not provide coverage for:

1. Back ups through sewers or drains
2. Discharges or overflows from a sump pump or related equipment
3. Seepage or leaks on or through the covered property

A backup of sewer or sump pump coverage endorsement covers the first two items above, so if you don't have this coverage through your insurer, or your insurer cancels your coverage, a FEMA policy will not protect you for these risks. Your only option is proactively work to get your municipality to update its drainage infrastructure so that you do not have to live with this risk (that's what the No Flood Zone group is all about!). But be prepared for a battle because municipalities have a great deal of discretion over the design of their sewer and sanitary systems. However, municipalities are periodically required to run various tests to make sure the systems are working properly. Failure to perform these ministerial duties can be judged to be an act of negligence.

But back to FEMA flood insurance. First of all, you have to live in a community that participates in the National Flood Insurance Program (NFIP), and Des Plaines does. However, you might wonder if you can still purchase this coverage because 8th Ward residents are not in a flood plain. However, the good news is that you do not have to be in a flood plain to purchase this insurance, and if you are not, you can get a "Preferred Risk Policy", which is significantly cheaper (basic can be as low as $119 per year). The second piece of good news is that, as long as your community is participating in the NFIP program, your coverage can never be canceled.

There are various coverage limits you can purchase for both structure and contents (there are separate limits for these), but there are coverage restrictions for basements, which are below grade. If you are getting coverage for a basement, personal property, like furniture or electronic devices, will not be covered. The only contents covered are your washer, dryer, food freezer, and portable air conditioner. Big ticket items like furnaces and hot water tanks are insured under the structure coverage. For basements, the cost for drywall material is covered, but not the cost to tape and plaster. Finished walls (e.g., paneling or painted walls) are not covered. If you have damage to the first floor of your home, the restrictions for basements do not apply, but again, it has to be surface water entering your home in order to have an insurable loss.

One thing to note is that sometimes isolating the cause of loss is not very easy. For example, if you have a raised ranch with a below grade garage, you may experience overland flooding and sewer backup. How would a claims adjuster separate the two when evaluating your loss? This may a good question to ask when you purchase coverage because you do not want to be surprised when you have a loss and then discover the loss was not insurable.

If you have any questions about this coverage, contact Mr. David Schein by phone at 312-408-5539 or by e-mail at David.Schein@dhs.gov, or call your insurance agent. Insurance agents get a commission to sell flood insurance policies, but according to Mr. Schein, are not very proactive in letting their policyholders know about this option.

Click on this link to get more detail about flood insurance polices.