Gulf Coast homeowners facing the unknown ramifications of the Deepwater Horizon oil spill received some solid good news from the government this week: The National Flood Insurance Program will cover property damage caused by oil in flood waters.
As we wrote about recently, the outcome is far less certain for homeowners insurance coverage, should the oil spill darken your doorstep, which makes this week's news from NFIP that much more welcome.
In a June 7 memorandum to nervous flood insurers, NFIP director of claims James Sadler said, “Oil in flood water is not new for the NFIP, especially in riverine flooding. In the past, the mixing of oil and other pollutants in flood waters resulted from damage caused by a storm.”
Any high-water event would have to qualify as a “defined flood” under the Standard Flood Insurance Polic, or SFIP, for damage caused by oil in the water to be covered under a flood policy.
Under the terms of the SFIP’s General Property Form, damage caused by pollutants to residential structures is limited to $10,000. Damage to ground, soil or land caused by flood, oil or flood water mixed with oil is not covered.
Sadler says there is no coverage for testing or monitoring of pollutants under the flood policy unless required by law. The cost to comply with local or state ordinances, including one that requires special removal methods for oil, is specifically excluded, he adds.
What’s your reaction?
Are you relieved that your flood insurance will pay to clean up oil damage to your home caused by flooding?
Or are you worried that $10,000 won’t be sufficient to cover the pollution cleanup from an oily storm surge?