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Flood insurance will cover damage from oil in floodwaters, officials say

Damage caused by oil in floodwaters will be covered by flood insurance policies, a concern with an imminent hurricane season.

 
BY DON MECOY | Published: June 17, 2010    Comment on this article Leave a comment

The Federal Emergency Management Agency has confirmed that National Flood Insurance Program (NFIP) policies will cover property damage caused by oil in floodwaters, according to the Insurance Information Institute.

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"FEMA's clarification comes after rising concerns over whether flood insurance policies would cover damage to homes and businesses, if oil from the Deepwater Horizon spill mixes with floodwaters, comes ashore during a storm and causes pollution damage to NFIP-covered buildings and their contents,” Insurance Information Institute Vice President Loretta Worters said.

Damage by flooding, including storm surge, is not covered by standard homeowners' or business owner's policies.

"Oil in floodwater is not a new issue for the NFIP, especially in riverine flooding,” said James A. Sadler, director of claims for the National Flood Insurance Program.

"In the past, the mixing of oil and other pollutants in floodwaters resulted from damage caused by a storm.”

For coverage under the Standard Flood Insurance Policy, the event must first be defined as a flood. In addition, there must also be direct physical loss to property from flooding for coverage to apply.

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Related Topics: Business, Natural Disasters, Personal Finance, Floods, Accidents and Disasters, Insurance, Homeowner's Insurance



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