Flood Insurance Policy Provides Up to $15 Million in Limits

April 3, 2006

The Chubb Group of Insurance Companies has introduced Personal Flood Insurance to help homeowners protect their homes and possessions from damage due to one of the most common and costly natural disasters. The policy, offered with limits up to $15 million for a home and its contents, provides significantly broader coverage than what is currently available through the National Flood Insurance Program (NFIP). Nearly all homeowners insurance policies exclude flood losses.

According to the Federal Emergency Management Agency (FEMA), flooding causes more than $2 billion in property damage in the United States each year. Despite this, only 14 percent of Americans say they have purchased flood insurance for their primary residence, according to a recent survey of 700 homeowners conducted for Chubb by Opinion Research Corp. Contrary to common belief, FEMA considers nearly every home at some risk of flooding. For individuals living on the coast, near a lake or riverside, the need for flood insurance is obvious. However, the threat of water damage is not so readily apparent to most other homeowners. Chubb’s survey found that almost 40 percent of Americans believe only owners of houses near bodies of water need to buy flood insurance.

“After last year’s record-breaking hurricane season, many associate flooding with rooftop rescues and widespread destruction. The reality for the many Americans who experience flooding is much less dramatic, but it’s still potentially very costly and disruptive to their lives,” said Peter Spicer, vice president, Chubb & Son, and new product manager, Chubb Personal Insurance.

“Flooding can happen anywhere in the United States, even in areas that are not considered high-risk by FEMA. Chubb’s Personal Flood Insurance policy covers this common, costly and often overlooked peril. When combined with Chubb’s Masterpiece(R) homeowners insurance, policyholders have financial protection for nearly all forms of water-related exposures.”

Damage can be caused by numerous flood exposures, including surface water run-off from a paved surface into the home; overflow or backup from a sewer or drain outside the home; or flood water entering the home through basement windows. Chubb Personal Flood Insurance covers these exposures and is broader than NFIP coverage.

The Chubb policy can provide up to $15 million in property coverage, including home and possessions, compared to a maximum of $250,000 for homes and $100,000 for contents through the NFIP. With Chubb’s policy, coverage is available in most flood zones, and “flood” is more broadly defined to include losses confined solely to the policyholder’s premises.

Chubb’s policy pays replacement costs to repair or rebuild a home and replace its contents, up to the limits selected by the policyholder. NFIP settles many claims on a cash value or depreciated basis. Chubb’s policy also provides $7,500 of automatic coverage for additional living expenses for policyholders displaced by a covered flood loss. For added protection, the policy offers an option to purchase an additional $100,000 of this coverage. In contrast, the NFIP policy does not provide any additional living expense coverage.

Chubb Personal Flood Insurance offers greater coverage for basements, the most flood-prone part of a home. For example, the policy includes $30,000 of coverage for losses to basement rooms such as a home theater or billiard room with built-in cabinetry; additional coverage up to a total of $250,000 is available. Chubb also automatically covers personal possessions in a basement, such as home theater systems, pool tables and exercise equipment, up to $15,000, with additional coverage available. The NFIP offers only narrow coverage for possessions in basements, limiting contents coverage there to certain appliances such as washing machines, dryers and freezers.

“Basements are the most vulnerable area in many houses, and homeowners are increasingly turning them into entertainment centers and game rooms, filling them with expensive electronics and furniture,” said Spicer. “Chubb’s Personal Flood Insurance helps cover these and other investments you have made in your home.”

Chubb has partnered with Pasadena, Calif.-based WNC First Insurance Services to manage the administration of its new flood insurance product.

Source: The Chubb Group of Insurance Companies

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