Protection After the Storm
Do you know what your homeowners insurance covers? It won't pay to clean up flood damage, but you may be able to claim more than you think.
June 2008
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You don't have to live along a coastline to be at risk for storm damage. Inland flooding spawned by tropical storms and hurricanes can inflict more damage than the storms themselves.
You probably know that ordinary homeowners policies don't cover flood damage. You need special insurance for that, available only through the National Flood Insurance Program. But your homeowners insurance may cover more storm and water damage than you think. "If you do have damage, don't make assumptions about what is covered and what is not," warns Jeanne Salvatore, spokeswoman for the Insurance Information Institute. "Call your agent immediately."
Here's how storm damage is usually handled, according to the institute and officials at State Farm, the nation's largest homeowners insurer:
- A tree falls on your house. Your homeowners policy covers damage to the house and up to $500 to remove the tree.
- A tree falls on your lawn. No coverage for the value of the tree nor the cost of removing it (forget grass seed). But flood insurance will pay to remove debris.
- Your roof is damaged and rain ruins your floors and furniture. Your policy covers the roof, floor and furniture.
- Flying debris breaks windows and rain damages the indoors. Again, homeowners to the rescue to pay for the windows and the rain damage.
- Flying debris lands in your pool, breaking tiles or the filter. Homeowners covers it.
- Pressure from waterlogged soil cracks the walls of your pool. That's "land movement," which is not covered under your homeowners policy. Pools aren't covered by flood insurance, either.
- Your car is flooded inside your garage. Look to your auto insurance's comprehensive coverage for help.
- High winds knock out your electricity for days, ruining hundreds of dollars worth of food in your freezer. Your homeowners policy may cover it.
- Rising water floods your first floor. You're covered only if you have flood insurance.
- Sewers or drains back up into your house. Usually, you're covered under a homeowners policy only if you have a separate endorsement for sewer or drain backup. Flood insurance will cover the damage if there has been flooding locally.
- Your house is flooded, then a broken gas line starts a fire. The fire triggers coverage under your homeowners policy.
- Part of your yard is washed away. Neither your homeowners nor a flood policy will pay.
- Soil is washed away from around your home's foundation, causing it to crack or shift. No coverage under your homeowners policy. A flood policy would pay only if there was local flooding and the problem occurred within 72 hours of the water receding from your home.
Even if the storm damage is covered by your insurance, you may want to think twice before filing a claim for less than $1,000. More and more insurers are dropping clients after just two small claims -- especially after ones related to water damage. And because insurance companies share claims information, it may be tough for you to get another policy for a decent price.
Consider raising your deductible to $1,000. Not only can that help you avoid trouble with your insurer, it can shave about 25% off your premium.
Uninsured damage may also qualify you for a tax deduction. You can claim the deduction if your uninsured loss, minus $100, exceeds 10% of your adjusted gross income. Use the Can you deduct your property damage? calculator to find out how much you can write off. If the damage occurred within a federally declared disaster area, you have the option of deducting the loss on your tax return for the year immediately before the disaster. For more on claiming the deduction, see IRS Publication 547, Casualties, Disasters and Thefts, and IRS Publication 584, Casualty, Disaster, and Theft Loss Workbook.
Editor's Note: This story has been updated since it originally was published in 2004.