August 13, 2014 at 10:47 am

As floodwaters recede, questions rise about insurance claims

The flood of rainwater that deluged Metro Detroit Monday afternoon turned into a flood of phone calls all day Tuesday, as waterlogged homeowners desperately dialed clean-up services and insurance agents.

In both cases, callers could be unhappy with what they hear.

George Azar, owner of House Doctorz in Sterling Heights, said he’s had to turn down homeowners calling for help, and the commercial equipment needed to dry out flooded homes and basements is in short supply.

“I haven’t seen anything like this since Hurricane Gustav in 2008,” Azar said. “One home in Warren had four feet of water. In Royal Oak and Clawson there are homes with up to two feet of water in (the) basement.”

Azar said he and his crew worked through the night, and had received nearly 100 calls about flooded basements by midday Tuesday. Many homeowners were so desperate they offered to pay him out-of-pocket and wait for reimbursement from their homeowner’s insurance.

In many cases, that reimbursement won’t be coming.

Residents relying on their regular homeowners insurance policy won’t see any coverage, said Laura Adams, a senior analyst at InsuranceQuotes.com, based in Denver.

“If the damage came from a leak in the roof it would be very different from rising groundwater,” Adams says. “Unfortunately, if consumers don’t have flood insurance, they are really unprotected.”

Unless homeowners have policies covering sewer back-ups, sump pump failures or special riders, they’re unlikely to get any money for the sopping rugs, furniture, clothing or other personal property soaked in a flooded basement. Even if they have federal flood insurance, that covers only structural damage to walls, foundations, furnaces, water heaters and electrical panels when it comes to water in the basement, noted David Schein, a flood insurance specialist with FEMA in Chicago.

In Metro Detroit, the average flood insurance premium is a little more than $900 a year, Schein said, and covers up to $250,000 in damage to the structure and $100,000 for personal property. Any insurance agent can sell the policies, which are all priced the same and offer the same coverage. Renters and condo owners can also get policies starting at $129 per year. Private flood insurance also is available, but generally costs more than federal insurance.

Homeowners don’t need to live in a flood area to qualify, but their community must participate in the National Flood Insurance Program, which requires adopting floodplain regulations that meet federal and state standards. In Metro Detroit, six communities don’t participate: Belleville, Melvindale, Van Buren Township, the village of Romeo, Addison Township and Novi Township.

“The only basement contents covered are a washer, dryer, food freezer and portable air-condition unit, that’s all.” Schein said. “We don’t cover furnishings and finished areas, entertainment centers or pool tables. Just the big-ticket items, such as the furnace and all the utilities.”

Federal flood insurance will cover basement drywall, if the fire code or building code requires those materials in a basement, but not paneling, Schein added.

Once you’re upstairs, the coverage is much better. For the part of the home that’s above ground, the National Flood Insurance Program offers building and structural coverage up to $250,000, and personal property up to $100,000, including furniture and electronics, plus up to $2,500 worth of art and furs.

Homeowners looking to cover all the contents of a finished basement can shop for something called “excess flood insurance,” which is added to either federal or private flood insurance. This can extend coverage beyond the caps of federal flood insurance — up to as much as $50 million — and cover personal property, as well.

Basement contents are also likely to be covered if a homeowner has bought a separate policy covering sewer backups or sump pump failures. Such polices can cover up to $10,000 of damage, and adding a sewer rider to an existing homeowners policy can cost as little as $50 per year.

Matthew Wolf, a partner at Wolf-Chandler Agency LLC, an independent insurance agency based in Bingham Farms, says that kind of coverage will come in handy for many of his Tuesday callers.

“We’re hearing a lot about water coming up through the drains in basements,” he said, adding that policies that cover backups typically cover most damage from water that got into a home’s basement.

“They usually cover anything that’s damaged by that water,” he said. “But it has to have backed up from a drain to trigger that coverage.”

Wolf said most of his agents are advising clients about their coverage limits, their deductibles and the procedures for reporting claims. He said policyholders should talk to their insurance company as soon as they’ve discovered a problem.

In addition, he said, they should call companies that mitigate water damage as soon as possible. “And then document everything as much as possible,” Wolf said. “Pictures are also great, especially if they were taken before the water recedes.”

When it comes to flooded cars, Wolf says he’s getting plenty of calls from policyholders who had to abandoned their vehicles on the area’s flooded roadways and freeways. In that case, the insurance question is much simpler: If a car owner has comprehensive coverage, which handles damage outside of a collision, that should cover at least some water damage.

“We’re fielding a lot of calls and talking to customers, setting up claims with insurance companies for them,” he said. “A lot of people are stressed out and working through the situation.”

That drove hundreds of area residents to the HYPE Recreation Center in Dearborn Heights on Tuesday night for a town hall session to learn how to tend to the clean up and protect their property rights.

“People need information so that they can get help and help themselves,” said Ali Dagher, a property law attorney. “This is a disaster that has impacted virtually everyone in the region, including those who cannot afford to repair the damage. ”

Some wondered if they were affected by sewer backups. Public Act 222 of 2001 clarifies the conditions under which municipalities are liable for backups. Those who experienced an overflow or backup and intend to make a claim for property damage or physical injury must file a written claim with the city within 45 days, attorney Tarek Baydoun said.

“You don’t get compensation if you don’t file a claim,” he said. But flooding without proof of a sewer defect doesn’t rise to the level of a compensable claim, he said.

Kamal Algahmie and his brother, both of Dearborn, came to the meeting to learn how to cope with the damage from several inches of water in their basements. On his cellphone were pictures of a lamp, baskets and other items floating in the murk.

“We don’t know what we’re going to do,” Algahmie said.

boconnor@detroitnews.com
(313) 222-2145
Staff writer Mark Hicks contributed.

'I put a towel there by the door, but I was still thinking, there is no way that the water is going to get here,' said Dave Bubnas about his Dearborn Heights home. 'Once it started coming in, there was no stopping it.' / Daniel Mears / The Detroit News