Why Aren’t Flood Insurance Companies Covering Cracked Foundations Caused By Flood?
As a result of Superstorm Sandy, thousands of property owners have suffered flood-related damage to their foundations. Obviously floods can cause significant foundation damage, but according to the National Flood Insurance Program (NFIP), so can settlement, improper construction, earth movement, tree roots and sinkholes – all causes of foundation damage that are not covered by flood insurance.
According to the NFIP, most slab and foundation damage occurs because of a lack of moisture in the ground. The soil shrinks away from the foundation, allowing the grade beams to settle downward under the supported weight. This results in a bowing effect and cracks. When excess water enters the ground, upward pressure is exerted on the slab floor and inward pressure on the subgrade foundation walls. This causes cracks and displacement. Damage of this kind is considered the result of hydrostatic pressure and is not covered under the Standard Flood Insurance Policy (SFIP), unless there is a general condition of flooding in the area.
In Sandy-related cases, most times it cannot be denied that there was a general condition of flooding. So why then are so many homeowners being denied coverage for damage to their foundation? Simply put, the required standard of proof on foundation damage cases. The NFIP has advised flood insurance adjusters in their manual to disregard statements by homeowners regarding foundation damage: “Many times an insured will claim normal settlement cracks in slabs and foundations as flood related. The insured will indicate that he or she never noticed the foundation and slab damage until after the flood. This neither proves nor disproves that the damage resulted from flood.”
According to the NFIP, flooding with water movement sufficient to carry the subsoil away (scouring) from the slab or foundation walls generally leaves visible signs. As a result, claims for foundation damage without any visible indication of scouring or land subsidence bear close scrutiny. The NFIP also states that most foundation and slab damage that occurs without any visible signs of soil displacement may have resulted from causes other than flooding and as such is not covered by the SFIP. The NFIP advises adjusters that they must carefully check the perimeter and underneath the building for soil washout from velocity water flow and when finding no indication, the adjuster must resist a claim for foundation damage. The NFIP goes on to say that “the insured then has the responsibility to prove that the damage was caused by flood” and that the use of structural engineers must be limited to losses with visible indications of flood damage or of floodwaters having exacerbated preexisting damage.
Therefore, according to the NFIP adjusters manual, adjusters must resist a claim for foundation damage if there are no visible indications of soil washout from velocity water flow (putting aside the visible damage to the foundation, the presence of multiple feet of water in some cases, and statements from homeowners that the damage was not present before the flood). Although the NFIP advises flood insurance companies to resist these types of claims and attempts to shift the burden of proving the damage to the insured, its interpretation is inconsistent with the coverage specified in the flood policy. Under the policy, if flood caused damage to the foundation, it should be covered.
If you have been improperly denied coverage relating to foundation damage, you need to act quickly before time expires to seek additional payments under the policy.
About the Author: Christopher W. Gerold is an attorney in Wolff & Samson’s Disaster Recovery Claims Group. Chris represents homeowners and businesses with their Sandy related insurance claims with a special focus on flood insurance. For more information on flood insurance and ways Wolff & Samson can help you with your flood insurance claim, please contact Chris at (973) 530-2061.