Many homeowners in New York and New Jersey are suffering excessive uninsured losses despite having homeowner’s insurance and even flood insurance.
Homeowner’s insurance only covers damage from water that does not hit the ground before it enters the house. Flood insurance, which costs more than homeowners insurance, does cover damage from water that enters the home after touching the ground, but there is a big exception — it does not cover below-grade finished living space such as a finished basement. It does cover basement appliances — such as furnaces — that support the above ground living space, but that’s all.
So imagine the shock of a homeowner in New Jersey whose finished basement is destroyed and he gets only $2,000 for the furnace — despite paying years of high premiums for flood insurance.
Here in Colorado, if you are in a flood prone area, this is important information to keep in mind whether or not you have flood insurance.
A more likely source of damage for the rest of us is water intrusion from a misdirected sprinkler or burst hose bib. When that water enters your basement, you will suffer damage that isn’t covered by insurance.
I think Hurricane Sandy taught us some valuable lessons, including the importance of having insurance. I think it is important for homeowners to know their insurance coverage, so there will no confusion when they file for their claims. Read the contract and ask about all the details, even the smallest ones. [Barry Bates]
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