Wind vs. Flood Contract Issue
Insurance was not meant to cover every conceivable loss. Even if it could, few if any people would be able to afford the premiums that would have to be charged for it. Certain events or types of damage are so catastrophic and have potential to cause such far-reaching devastation that it is virtually impossible to price insurance products to cover them – for example, war, nuclear disaster, and flood. Therefore, coverage for these events or causes of loss is often not included in insurance policies.
Because flood losses are typically not covered under a homeowners’ insurance policy it is critical for consumers to review the coverages contained in their insurance policies before a loss occurs.
State Farm® handles each claim on its own merits and we pay what is owed based on our contract with the policyholder. When one of our claim representatives arrives to help a customer, he or she looks for damage that is covered by that customer’s policy, so we can promptly pay the customer what is owed.
When credible proof exists that a covered loss – like wind – damaged a home, that portion of the loss will be paid, regardless of whether flood later destroyed the home. However, we must be able to determine that a covered loss occurred, and the amount of damage, in order to pay.
For more information, please read a summary of a paper written on the wind vs. flood contract issue by the Washington Legal Foundation.