I know the subject of downed trees and flood insurance have been covered in past articles, but I thought it would be timely if I go over each of these items due to Irma’s visit to us this week. First, let’s cover floods.
Flood insurance is underwritten by the federal government. Before Harvey hit Texas and Louisiana the flood program was $25 billion in debt. Recent hurricanes will make that deficit even worse. The problem is that the rates for flood insurance are not actuarially sufficient. The plan basically only covers homes in flood prone areas that pose the highest risk. It is like writing auto insurance for all 16-year-old single male drivers and charging them a rate for a 40-year-old married male. Insurance is the law of large numbers where some risk groups subsidize others. If homeowners in non-flood areas do not purchase flood insurance their lower experience cannot offset the higher risk of those insureds in flood areas.
Who can purchase flood insurance? Any home or business owner can buy it even if they are not in a designated flood zone. If you are in a flood zone, the issues that affect the price are the zone itself, your structure’s elevation and the amount of insurance you select. The maximum value of basic flood insurance is $250,000 on the structure and $100,000 on the contents. Lower limits are available. The higher the elevation, the lower the price depending on zone. Zone AE has the highest risk and rates. You may also purchase excess flood insurance through your agent if you need more coverage. Remember, each covered loss is subject to a deductible.
The biggest issue here in the Macon area as the result of Tropical Storm Irma appears to be downed trees. If a tree in your yard hits your home, the property damage is covered by your homeowner policy. So is the cost of removing the tree. The total cost is subject to your policy deductible.
If a tree from your yard hits your neighbor’s home, that is a different issue. If your tree was a live tree that the wind blew down on your neighbor’s home, you are not responsible for the damage to his/her property. That is an act of God. You are responsible for removing that part of the tree that is on your property. Your neighbor would report the damage to his/her insurance company for coverage.
If the tree was a dead tree and hits your neighbor’s property, you would be negligent for not removing the tree, knowing it was in fact dead, and at risk of falling over. Your insurance company would then be called on to cover the damage to your neighbor’s property. When in doubt of any coverage, call your agent to let them guide you through the process.
Dave Pushman is the former regional vice president of Geico in Macon and is now an independent insurance agent with Tidwell and Hilburn Insurance. He can be reached at email@example.com.