There are two insurance policies that deal with a homeowner’s damage due to water — a flood insurance policy and a homeowners insurance policy. Losses not covered by one of these policies may be covered by the other. Knowing the losses to which your home could be exposed will help you decide whether to buy one or both of these insurance coverage.

While insurance policies may differ in the coverage provided from homeowner to homeowner, there often are basic features common to all policies.

FLOOD INSURANCE

As the name implies, a standard flood insurance policy, which is written by the National Flood Insurance Program, provides coverage up to the policy limit for damage caused by flood. The dictionary defines “flood” as a rising and overflowing of a body of water onto normally dry land. For insurance purposes, the word “rising” in this definition is the key to distinguishing flood damage from water damage. Generally, damage caused by water that has been on the ground at some point before damaging your home is considered to be flood damage. A handful of examples of flood damage include:

• A nearby river overflows its banks and washes into your home.
• A heavy rain seeps into your basement because the soil can’t absorb the water quickly enough
• A heavy rain or flash flood causes the hill behind your house to collapse into a mud slide that oozes into your home.

Flood damage to your home can be insured only with a flood insurance policy — no other insurance will cover flood damage.  To determine if your home is located in a flood plain, contact your county planning office. If you are living in a flood plain, flood insurance may be an excellent purchase.

HOMEOWNERS INSURANCE

A homeowners insurance policy doesn’t provide coverage for flood damage, but it does provide coverage for many types of water damage to your home. Just the opposite from flood damage, for insurance purposes, water damage is considered to occur when water damages your home before the water comes in contact with the ground. A few examples of water damage include:

• A hailstorm smashes your window, permitting hail and rain free access into your home.
• A heavy rain soaks through the roof, allowing water to drip through your attic or ceiling.
• A broken water pipe spews water into your home.

Even if flood or water damage is not covered by your homeowners insurance policy, losses from theft, fire or explosion resulting from water damage is covered. For example, if a nearby creek overflows and floods your home, and looters steal some of your furnishings after you evacuate, the theft would be covered by your homeowners insurance because it is a direct result of the water damage. However, the flood damage would be covered only if you have flood insurance.

It’s important to note that flood insurance and homeowners insurance do not duplicate coverage for water damage. Instead, they complement each other.

Flooding comes from many sources: heavy rains, melting snow, dam collapse and levee failures, ice jams and tidal storm surges. Floods can be sudden, but others can give days of warning. Being located within a flood zone certainly can put a business at risk, but being outside an established zone doesn’t guarantee safety. Prudent business owners will be familiar with the flood history and base flood elevations of the bodies of water nearby, coupled with an action plan should a flood occur. Recognize that just because a body of water hasn’t flooded before, does not mean that it never will. Ice jams, unusual heavy snows with rapid thaws, new construction, and new roads or bridges can all alter flood potential. Note that fires at damaged sites are not uncommon after a flood due to spilled hazardous materials, floating flammable gas cylinders, damaged electrical equipment, cutting and welding repairs, and other hazards.

Protection and preparation

• Establish if the site is located near official flood zones, streams, creeks, tributaries, rivers, lakes, oceans, retention basins, storm drain outlets, dams, levees and other bodies of water. Use a surveyor to determine site elevations and low points, and act on the findings.
• Create suitable permanent levees or flood walls where possible. Plan the placement of sand bags to divert water away from critical buildings. Estimate the number of bags needed and the time needed to fill and place them.
• Provide barriers or eliminate low-lying doors and other openings in exterior walls. Waterproof basements.
• Provide shut-off valves on sewer and other drainage lines to prevent reverse flow.
• Stockpile sandbags, sand, gasoline-driven water pumps, squeegees, mops, shovels and other supplies to combat and clean up floodwaters.
• Maintain all water-damageable materials and stock on skids or in racks. Do not use basements to store critical equipment or materials.
• Establish vendor contracts for restoration of critical equipment and machinery, hot sites, etc. Also, identify vendors who can provide dehumidification and cleaning of buildings and materials.
• Take inventory of unsecured outside equipment and materials. Establish methods and actions to secure these when needed. Ensure all LPG tanks are strapped to their saddles. Anchor other tanks that may float during a flood, including attention to underground tanks. Plan for the handling and securing of hazardous materials, such as gas cylinders and flammable liquid drums.
• Provide for emergency communication equipment.
• Provide generators or other means of emergency power, and test unit(s) periodically.
• Provide flood protection for fire sprinkler pump houses.

Response

• Alert employees, emergency response teams and management.
• Maintain a flood watch center.
• Place sand bags at low points and at doors, then follow planned placements to seal off buildings.
• Shut down processes, boilers and furnaces. Coat machinery with rust-preventive materials. Shut off electrical power except the power-operating sump pumps, fire pumps and other critical equipment.
• Move electronic equipment, critical tools and equipment, vital business records and other damageable materials to higher levels or other locations. Verify that stock, materials and equipment are skidded; remove critical equipment and tools from basements.
• Close gas and propane lines from outside site tanks. Close sewer and drainage line valves. Secure all hazardous materials and shut off their supply piping systems.
• Bring inside or tie down equipment, tools, cans, barrels and other containers, furniture and other unsecured items.
• Move trucks, cars and other mobile equipment to higher ground.
• Verify that fire protection equipment is operational.
• Prepare emergency equipment, check fuel levels in generators and pumps, conduct start tests, check flashlights and prepare other provisions.
• Evacuate the facility in a timely manner to safeguard all employees. Follow all orders from authorities.
• Provide for safe shelter, escape boats, life jackets, non-perishable food, water, lighting, radios and other necessary items for any emergency personnel who will remain in the facility during the flood.

Recovery

• Survey site for damage.
• Activate business continuity plan.
• Restore any damaged fire protection systems.
• Maintain pumps.
• Attend to hazardous material spills, floating cylinders, dislodged tanks and other dangerous items.
• Begin salvage efforts.
• Remove standing water. Begin dehumidification.
• Remove mud, silt and combustible debris.
• Have all electrical systems, process systems, and heating equipment inspected by experts before repowering. Replace submerged circuits.
• Have electronic equipment serviced by restoration vendors.
• Replace motors on submerged equipment and tools. Disassemble power trains, bearings and other components. Dry, remove silt and lubricate. Recoat with rust preventatives.
• Use hot work permit program for any welding and cutting.

Resources

Travelers documents

To access these documents, log in to our Risk Control Customer Center at travelers.com/riskcontrol and type all or part of the title in the “Search All Products” field.

• Disaster Recovery Guide
• Emergency Planning – Do Your Employees Know What to Do?