Even if you have flood insurance, basements are probably sunk
Sometimes I think Fate has it in for our hometown.
Detroit has suffered through the oil embargo of the 1970s, the recessions of every decade since, and, now, the epic biggest-ever municipal bankruptcy of all time. Plus, during all that time: the unending humiliation of hosting the Detroit Lions.
Then, last week, we endured rain heavy enough to float Noah’s ark, except that in what was clearly a cost-cutting move, Mother Nature decided that rather than flood Motown for 40 days and 40 nights, it was cheaper to dump a month’s worth of rain on us in one afternoon and wait for all the sewers to back up.
Now it really IS a wet bar
Detroit isn’t alone. Parts of New York, Maryland and Nebraska were hit with flooding, too. All that excess moisture leaves many of us facing unexpected repair bills to roofs, basements and even (heaven forefend!) the lower level home theater and wine cellar. And in many cases, those bills won’t be covered by insurance.
That’s because federal flood insurance covers only structural and some mechanical items in a basement. So if the walls or floor buckle or your water heater or electrical panel drowns, you’re good, but that’s it. The waterlogged oak wet bar, carpeting and leather recliners are all your problem. If they were above ground level, they’d be covered, along with your other personal property.
If your basement has a walk-out to the yard, then it’s not considered a basement, and federal insurance gives you full coverage of up to $100,000 on your contents, along with $250,000 on the structure. Likewise, if your regular homeowner’s policy has a rider covering sump-pump failure or backed-up sewers, that coverage also will pay for damaged furnishings, clothes and other property, provided the water damage was caused by a bad sump pump or an overwhelmed sewer system.
Bailing out your basement
But if you have to walk up to get out of your lower level, it’s a basement, and the only way to protect anything beyond the basics is with “excess flood insurance.” Surprisingly, that’s not offered by the big names in homeowners, so you’ll have to look around. According to the National Association of Realtors, companies offering the coverage include ACE Ltd., AIG, Burns & Wilcox, Chubb, Fireman’s Fund, Lloyd’s of London, the Private Client Group at Chartis, Privilege Underwriters Reciprocal Exchange, SWBC and Wright Flood.
Besides covering personal property in a flood, excess insurance is also needed if damages to your home would cost more than the $250,000 federal cap on structural repairs. If you’re taking out a mortgage on riverside McMansion, your lender will probably require excess insurance on top of a federal flood policy. And, naturally, it’s going to cost more than federal flood insurance, which averages just over $900 a year in Metro Detroit.
The bottom line when it comes to your basement is that you’re going to need something extra to cover flooding. Otherwise, when the rains come and you get soaked, you’re going to really get soaked.
Brian O’Connor is author of the award-winning book, “The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese.”