Floods and Earth Movement

At risk for floods, mudslides, and landslides? You may need additional insurance coverage

The recent devastating floods in Washington state are a powerful reminder that flooding, landslides, and mudslides can happen close to home, especially during the Pacific Northwest’s rainy season. Before damage strikes, homeowners and business owners can take steps to protect what matters most by considering Flood Insurance and/or a Difference in Conditions (DIC) policy, particularly if their property is located in a higher-risk area.

“It still comes as a surprise to many people that a standard homeowners or renters insurance policy does not pay for damage due to flooding, and that can include sewer or water line backups as well as overflowing rivers or lakes,” said Kenton Brine, NW Insurance Council President. “And more often than ever before, flooding is occurring outside of known flood-prone areas, so it’s wise to consider adding coverage.”

Flood Insurance
Most standard Homeowners, Renters and Business Insurance policies do not cover damage caused by flooding or mudflows. This includes, in most cases, damage from a sewer line backup. 

Flood Insurance is available through the National Flood Insurance Program (NFIP) and, in some cases, through some private insurers.

Some insurance policies may provide limited coverage for certain types of water damage, such as rainwater entering through a roof leak, or for flooding and mudslides directly related to wildfire. However, flood damage on its own is specifically excluded from standard home and business insurance policies.

No home is completely safe from flooding. According to the NFIP, more than 20 percent of flood claims come from properties outside mapped high-risk flood zones. And keep in mind that just one inch of water in a home can cause more than $25,000 in damage, according to NFIP.

Waiting until flood waters rise to purchase Flood Insurance is risky. Most policies include a 30-day waiting period before coverage takes effect, meaning damage that occurs during that time will not be covered.

The NW Insurance Council, NFIP and the Insurance Institute for Business and Home Safety (IBHS) offer these tips as you consider purchasing Flood Insurance:

• Know your flood risk. Find out if your property is in a floodplain and if your community participates in the NFIP. Contact your city or county building or planning department and ask to review Flood Insurance Rate Maps published by the Federal Emergency Management Agency (FEMA) to determine your Base Flood Elevation.
• Talk with your insurance professional. An insurance agent or company can help you obtain Flood Insurance quotes through the NFIP and explain available coverage options.
• Purchase adequate coverage. If your property is at risk, consider buying as much flood coverage as possible — up to the value of your home or business structure. Primary residences insured to at least 80 percent of their value, or to the NFIP maximum, may qualify for replacement cost coverage.
• Don’t Delay. Flood insurance policies typically take effect 30 days after purchase, although limited exceptions may apply. For example, properties affected by flooding on burned federal land may qualify for a waived waiting period if the policy is purchased within 60 days of a fire’s containment date. Visit NFIP’s website for more information.
• Review your auto insurance. Damage to vehicles caused by earth movement or flooding is covered only if the owner has chosen to include optional Comprehensive Coverage in the auto policy.

Difference in Conditions Coverage
Heavy rainfall increases the risk of landslides, sinkholes, and other types of earth movement — hazards that are not covered by standard homeowners or business insurance policies. For property owners in areas where these risks are higher, additional protection may be available.

Coverage for earth movement is typically offered through a Difference in Conditions (DIC) policy, which can be purchased as a stand-alone policy for homes or businesses. DIC policies are usually available through specialty or surplus lines insurers and can help cover losses that would otherwise be excluded from standard insurance.

The cost of a DIC policy varies based on factors such as property slope, proximity to bluffs or hillsides, prior earth movement in the area, and the type and size of the structure. As a general example, a homeowner with a $300,000 home in a higher-risk area might expect to pay about $1,000 per year for DIC coverage, in addition to the cost of a standard homeowners policy.

Property owners are encouraged to talk with their insurance agent or company to better understand their specific risks and whether DIC coverage is appropriate. In addition, experts recommend maintaining a current home or business inventory and creating an emergency or evacuation plan—steps that can make recovery faster and less stressful if a disaster occurs.

For more information about property and casualty insurance, contact NW Insurance Council at (800) 664-4942.