FEMA: Insurance Applies if Oil from Spill Mixes with Flood Waters

The Federal Emergency Management Agency has clarified that in the event of a declared flooding disaster, National Flood Insurance Program coverage will apply even if oil from the British Petroleum deep well blowout in the Gulf of Mexico is mixed with flood waters.

The NFIP will bill BP for reimbursement for any claims it pays for covered properties affected by flood waters mixed with oil from the BP spill.

In a memorandum issued to insurance industry Write Your Own flood program particpants, James A Sadler, director of Claims for the NFIP, said that oil in flood water is not a new development for the flood insurance program. However, in order for coverage to apply there must first be a definitional flood as described in the Standard Flood Insurance Policy (SFIP), Sadler wrote.

Damage caused by the oil in flood waters is covered subject to the provisions of the SFIP.

Other stipulations provided by Sadler in the memo include:

Source: FEMA