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TROUBLESHOOTERS: What to know about flood insurance

In this week’s edition of Troubleshooters, Jessica Cook met with a local insurance agent who said there are a lot of misconceptions when it comes to flood insurance.

Many people experience basement flooding, but when they call their insurance agent, they find out the bill falls on the homeowner.

Laurie Adams with Country Financial said, “We absolutely need to talk about this more because most of the time, this conversation occurs after people already have a problem.”

Adams said flood insurance dates back to 1968. That’s when the federal government stepped in to help people impacted by years of flooding and hurricanes. She said there’s a lot of misunderstanding which goes along with this type of coverage.

“Flood insurance is very specific because it’s only for water that escapes a natural boundary,” said Adams, “so in other words, a river overflows, or a lake, or a pond or creek, which is actually one of the bigger problems that people don’t expect.”

So how do you know if you should add this type of insurance? Adams said FEMA maps out flood plains and you get an assignment code based on how close you live to a body of water which might overflow. That code determines how much is coming out of your bank account. Adams adds a lot of people have flood insurance simply because the bank requires them to because of a mortgage.

“That usually comes at a bad time for people because it’s an expense they weren’t planning on during what is already an expensive time.”

Adams said she is not sure how many people in the heart of Illinois have this type of insurance policy, but there’s concern the number isn’t high enough.

“The more expensive their policy is, the more exposure they have. It’s a terrific risk and it’s important to understand that the federal government is becoming much more strict about what kind of disaster relief they offer people who live in flood plains, that have chosen not to buy flood insurance.”

Adams encourages people to make sure their coverage is focusing on the contents in your building or home, and not the structure itself.

“The federal flood insurance program has been operating at a deficit since Hurricane Katrina,” said Adams, “so we’re talking… coming up on 10,15 years and we certainly have had more hurricanes since then that have been very serious. Premiums have gone up a lot over the past few years.”

While this insurance can cost you hundreds, even thousands of dollars, Adams said it’s worth it. Heading back to basements, you may be thinking: “Am I out of luck if my basement ever floods?”  The answer is no. Adams said you need to have sump pump failure or sewer backup.

“That’s when water comes up through the drains but there honestly is no insurance you can buy that seeps in through the cracks in the foundation, because that’s largely considered more of a maintenance issue.”

She adds it’s always better to do preventative work, because even if you have coverage, it can still be a nightmare.

If you file a claim through insurance, it could take anywhere from six months to a year to wrap up. Bottom line: talk to your insurance company about what options you have, before it’s too late.

Molly Jirasek

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