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A massive mudslide endangering homes in Mesa County, Colorado... The tragic Washington State mudslide... These events raise questions about what's covered by insurance and what's not. Here's what you need to know:
- Homeowners, renters and business insurance policies typically exclude flood, mudflow, landslide and earthquake. Also visit: Homeowners Insurance Basics
- Landslides, mudslides and mudflow are considered different perils and require different insurance—separate from a homeowners or business policy. Landslides and mudslides are primarily earth movement, while a mudflow is caused by water picking up soil and turning into mud. With a mudflow, the primary ingredient is water, so flood insurance will typically cover parts of this loss. Click here to read about flood insurance and mudflow.
- The National Flood Insurance Program offers "Flood & Mudflow" coverage up to $250,000 for a homeowner and $500,000 for a business. Renters can buy policies for their personal contents. Flood insurance must be purchased 30 days in advance of a flood. Also visit: www.floodsmart.gov
- A "Difference In Conditions" policy includes coverage for flood, landslide, mudflow and earthquake. Depending on risk factors, such as the slope of your property or proximity to a cliff, a homeowner with a $300,000 house can expect to pay $1,000 or more per year for this coverage.
- A "Difference In Conditions" policy can only be purchased through a surplus-lines carrier as a stand-alone policy. Click here for details.
- Insurance is tied to the "cause of loss" or what peril caused the damage. So, any coverage you have under your homeowners or business insurance policy does not apply if the peril is excluded—flood, mudslide, mudflow, earthquake. That means additional living expenses "ALE" or business interruption is NOT covered. Flood insurance also does not cover ALE or business interruption. Also visit: Homeowners Insurance Basics
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