Homeowners often presume that they are covered for property damage to their home caused by flooding. This misconception can be even more harmful to homeowners because the term “flood damage” is far more expansive within the context of an insurance policy than the meaning when the term is used in everyday parlance. Water damage caused by a swimming pool located on higher ground that overflows into the entrance of a backyard might be considered flood damage. Since flood damage must be covered through the National Flood Insurance Program (NFIP), homeowners must understand the importance of ensuring they have flood coverage. In this blog, our homeowner insurance lawyers review a decision revealing the devastating consequences of terminating or failing to obtain flood coverage.
In Hodde v. American Bankers Insurance Company of Florida, the policyholders purchased two separate Standard Flood Insurance Policies (SFIP) on May 31, 2011. The policies included a 30-day waiting period. The terms of the policy allowed the insureds to cancel the coverage and obtain a full refund of all premiums during the waiting period. On June 6, 2011, FEMA announced the Missouri River was flooding, which made the policies worthless for the June flood because the 30-day waiting period had not expired. After FEMA designated the impending flood, the policyholders exercised their contractual right to terminate the policy and obtain a refund. The policyholders home was subsequently destroyed when the Missouri River flooded shortly after the policies were canceled. Continue reading →