Detroit-area residents learn hard way what flood coverage does not include

Flood insurance through covers most damage to the ground floor, but everything may not be provided for in the basement.

Detroit-area home and business owners were recently the recipients of widespread flooding, and while some people had the appropriate insurance policies in place, a considerable number of them learned that they weren't sufficiently covered.

The Detroit Free Press reported that after recent flooding, a large number of residents in Detroit didn't realize that standard homeowners insurance typically doesn't include flood insurance. This is coverage that has to be requested specifically.

Furthermore, many didn't realize that flood coverage purchased through the Federal Emergency Management Agency isn't always exhaustive. In other words, flooding insurance that's backed by the federal government typically reimburses policyholders if they sustain damage to their basement foundation, walls, major appliances and furnaces, but that can't be said for other parts of the home. Typically, water that damages carpeting has to be paid for out of pocket. The same is true for floor tiles.

Roger McDaid, a local insurance coverage expert, noted that this includes the basement, which is typically the portion of the house that gets the most flood damage.

"If you've got a finished basement and floodwater comes into the house and damages your stereos and TVs and furniture – flood insurance does not cover that," said McDaid, the Detroit Free Press reported.

Reimbursement usually depends on value

David Schein, a flood insurance specialist with FEMA, added that while appliances on the ground floor of a home typically are covered, policyholders should understand that they'll be reimbursed based on how much their appliances are valued presently.

"So if you've got a 10-year-old television, you're gonna get what a 10-year-old television is worth today, minus any deductible you have chosen," said Schein.

The paper noted that furnaces, meanwhile, are covered by flood insurance, independent of what they're currently valued at.

As for business owners in Detroit, many impacted by high water levels have come to realize that the damage incurred stemmed from overwhelmed sewer systems, which federally backed flood insurance policies don't provide for, Crain's Detroit Business recently noted.

Lori Conarton, director of communications for the Insurance Institute of Michigan, said that policyholders who have flood coverage should be clear about what their plans don't include just as much as what they do. Though most flood policies are purchased through the National Insurance Flood Program, private insurers may have different plans that are more comprehensive.