Texas General Lines — Property and CasualtyPersonal LinesMedium
A client lives in a coastal community and wants to ensure their home is protected against rising water due to storm surge. Their standard HO-3 policy explicitly excludes flood. Which of the following options would provide the necessary coverage?
- APurchase a Personal Umbrella Policy.
- BPurchase a National Flood Insurance Program (NFIP) policy.
- CAdd a Water Damage Endorsement to their HO-3 policy.
- DIncrease the Coverage A limit on their HO-3 policy.
Show answer & explanationAnswer & explanation
Correct answer: B. Purchase a National Flood Insurance Program (NFIP) policy.
Standard homeowners policies, including HO-3, specifically exclude flood damage. Rising water due to storm surge is considered flood. The National Flood Insurance Program (NFIP) is the primary source of flood insurance for homeowners in participating communities.
Why the other options are wrong
- A. A Personal Umbrella Policy provides excess liability coverage and does not extend property coverage to excluded perils like flood.
- C. A general water damage endorsement typically covers perils like sewer backup or sump pump overflow, not flood.
- D. Increasing Coverage A only increases the limit for covered perils; it does not add coverage for excluded perils like flood.
Flood Insurance
Flood insurance provides coverage for direct physical loss to property caused by flood, which is typically excluded from standard property policies.
- Most flood insurance is provided through the NFIP.
- Coverage usually has a 30-day waiting period.
- Flood includes overflowing bodies of water, unusual accumulation of surface water, and mudflow.
Memory trick: When 'W'ater 'R'ises, 'N'FIP 'S'aves.