Facts about flood insurance: What you need to know

Understanding insurance could save your money

Debris clutters a street curb after a historic flooding in August 2014 in Royal Oak, Mich.
Debris clutters a street curb after a historic flooding in August 2014 in Royal Oak, Mich. (WDIV)

DETROIT – Thousands of Metro Detroiters were trying to clean up and carry on after a historic flood swept through the area in August 2014.

So many people watched in horror as their basements filled with water, damaging their belongings and breaking their hearts.

“I got a lot of stuff that’s messed up in my basement, carpets, couches, refrigerators, a lot of my paperwork,” said Joseph Barnes of Detroit, as he looked for answers at a flood assistance event in 2014.

That weather disaster had thousands of people wondering if they could afford to repair or replace what was damaged. The destruction had them pulling out their homeowner’s policies, hoping they were covered. Many people found they did not have the coverage they hoped would help pay for their losses.

What you need to know

Here are some facts you need to know about what many people call “flood insurance.”

This information should give you some key talking points as you review your existing insurance coverage, or if you're shopping for new protection.

First, when you buy homeowner's insurance, you are not buying flood insurance.

“Homeowners specifically excludes flood insurance,” said insurance agent Denise Cox, of Donald K. Pierce and Company Insurance in Grosse Pointe. She said there are two separate and distinct polices.

"The only time the issue of flood insurance ever comes up is if the mortgage company requires the insured to carry the insurance," Cox added.

She said none of her clients carry flood insurance unless required by their lenders.

  • All flood insurance polices are backed by the federal government.
  • The government sets all rates.
  • Flood insurance never covers contents in a basement. It only covers the basement's foundation and dry wall. It does not cover carpeting, paneling, or tile.
  • Most flood insurance policies just cover the dwelling, in case the home is swept away in a flood.
  • You can purchase flood insurance for the contents of the main floor, but that will add to your premium.
  • Flood insurance will cover certain major appliances like furnaces, air conditioners, freezers, etc.
  • It will not cover stereos, televisions, furniture, or other contents.

"I would not recommend anyone finish their basement here. Just use it for storage and keep everything elevated," Cox said.

Key distinction: What’s a flood?

Flood insurance involves water coming into your home from rain, a river, a lake, or external source of water. Flood insurance does not cover water sewer backup, which is what we saw around Metro Detroit in 2014.

"I think that they should buy the most water sewer backup coverage they can buy," said Cox. "We have a lot of basements here and a lot of people have finished basements and a lot of people keep a lot of things in their basements."

She strongly advises you to talk to you insurance agent about buying water sewer backup coverage. Cox says you can buy about $5,000 of coverage for about $80 a year. She says some customer turn down the coverage, but you should at least consider the option, especially if you keep a lot of stuff in your basement.

“I would hope the agent would bring it up, but it’s going to ultimately be the responsibility of the buyer,” said Cox.

Three things to understand

In summary, here are three facts you must understand about insurance protection during a flood event:

  • Just buying homeowners insurance isn't enough to protect your belongings.
  • Flood insurance covers damage caused by water coming into the dwelling. Most people don't have it, unless they live on a flood plain and are required by their mortgage to purchase the coverage. You cannot cover most of the contents in your basement with flood insurance.
  • You’ll want to consider water sewer backup coverage in Metro Detroit -- talk to your agent about that type of policy.

About the Authors:

Hank Winchester is Local 4's Consumer Investigative Reporter and the head of WDIV's "Help Me Hank" Consumer Unit. He works to solve consumer complaints, reveal important recalls and track down thieves who have ripped off metro Detroiters.

Dave Bartkowiak Jr. is the digital managing editor for ClickOnDetroit.