- Does Car Insurance Cover Flood Damage
- The Insurance Center Group
- Can I Just Keep Cash From A Car Insurance Payout And Not Make The Repair?
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Does Car Insurance Cover Flood Damage – I’m wondering if my car insurance covers flood damage to my vehicle. And like most questions related to car insurance, the answer is somewhat complicated. This depends on the type of policy you purchase.
Today, our team of qualified insurance agents are here to explain when flood damage and water damage is covered by car insurance.
Does Car Insurance Cover Flood Damage
If you’re in a hurry, know that full coverage car insurance almost always covers flood damage. And exclusive liability insurance does not cover flood damage.
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Of course, there are more specific points and nuances to this question, so let’s look at them in more detail. Below we will discuss the following points:
Liability-only policies, which are the “minimum” policies required by your state, do not cover flood or water damage of any kind. This type of car insurance exists solely to protect you financially from damage you may cause to other people or property.
This helps pay for damage you may cause to other vehicles, structures, fences, people and animals. However, you will not pay the following costs:
So what type of car insurance do you need to cover your risk of flood damage? You will need a full coverage policy with comprehensive insurance.
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Collision coverage varies. It covers damage to your vehicle resulting from any type of collision or collision, whether you hit a structure, another vehicle, or something else.
Now let’s take a look at some of the ways car insurance can apply when flooding or water damage is an issue.
A full coverage policy with comprehensive coverage covers damage caused by local flooding. Issues such as tropical storms, hurricane flooding, thunderstorms and lightning are all covered.
If you live in a flood area or are worried about flood damage to your vehicle, a full coverage policy will help you sleep better at night.
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For example, if you live in Jacksonville, Florida, you face hurricane season every year. Even if you own the vehicle outright and don’t pay for it, it’s wise to maintain a full coverage car insurance policy. You can rest easy knowing your vehicle is protected in the event of flooding or other damage from hurricane winds, fallen tree limbs, flying debris, or heavy rain.
Also, be aware that the lien holder may require you to maintain full coverage auto insurance while you pay off the car. This protects your bank, credit union, or other financial institution from damage from hurricanes, floods, theft, and more. Of course, you’ll have to pay a deductible when you file a claim.
Here I will use a few stories to illustrate water damage car insurance claims. First, let’s imagine a young married man named Darryl. He lives in Miami, Florida and owns several vehicles.
Darryl’s daily driver is an old Honda Accord worth $3,000 that he owns outright. And he paid for a new minivan for his family. He still owes about $20,000 on the van, but it’s worth about $30,000.
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A huge hurricane hits Miami. Darryl’s entire neighborhood was under two feet of water. Both vehicles are soaked. The interiors of both vehicles were damaged, and all computers and advanced technology in the new minivan were discarded.
Darryl contacts his auto insurance company to file claims for both vehicles. Let’s assume you are a large insurance company, Farmers Insurance.
Farmers Insurance is aware of the hurricane and is fielding claims calls all day. They ask Darryl for the following information:
Within a few days, a claims adjuster visits Darryl to review the damages. The adjuster decides that both vehicles should be “totalized.” This means that your vehicle will cost more to repair than it would cost to repair it. Both cars were towed to a junkyard.
What Does Flood Insurance Cover
Insurance claims adjusters now write a few checks. First, he writes an existing Accord check for $2,000. (Vehicle value minus $1,000 deductible.)
Farmers Insurance then pays the minivan balance of $20,000 and cuts Darryl an additional $9,000 check. (This is the amount Darryl must pay after paying his $1,000 deductible.)
Thanks to the insurance policy, Darryl now has $11,000 to spend as he sees fit. He can invest that money in a new vehicle, buy a used car, or lease a vehicle.
Stacey is 19 years old and lives with her parents next door to Darryl. Her 1997 Toyota Corolla was parked in the driveway as the hurricane hit. The Toyota is worth about $900, and because the vehicle is not valuable, Stacey only has liability coverage.
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When the flood comes, her car is also damaged. But because Stacey does not have full coverage, she is unable to receive funds from her insurer. Stacey has to pay a towing company to retrieve her car and take it to the junkyard.
Nonetheless, Stacey saved her money with the PLPD policy. Buying full insurance will cost you more than the value of your car each year, and your entire vehicle payout (minus the deductible) will be completely worthless.
Another neighbor, Saul, was driving home from work when the hurricane hit Miami. He drives an expensive Lexus worth $100,000. He owns the car outright and maintains full coverage insurance with a $1,000 deductible.
Saul cautiously pulls over to Interstate 95 to wait for the storm to pass. However, another driver on I-95 was driving too fast for conditions, lost control, hit the Lexus, and ended up in a ditch. The ditch is quickly filling with water, but luckily Saul is unharmed and is able to get out of the car quickly.
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This makes water damage claims even more complicated. Saul’s insurance company will likely pay out all of Lexus and then sue the other driver’s insurance through a process called subrogation. Saul walks away with a check for $99,000.
Now that we’ve covered some of the possible situations in which your car insurance might cover flood or water damage, let’s answer some of the most frequently asked questions about insurance and water damage.
No. As of 2023, no state in the United States has a specific flood insurance policy for automobiles. If you have comprehensive insurance, also known as a “new car” package or a “full coverage policy,” you are covered for water damage. This includes water damage from rain, hurricanes, tropical storms, etc.
The comprehensive part of your car insurance also covers fallen tree limbs, flying trash cans, and other wind-blown debris.
Does My Car Insurance Cover Everything?
However, if you have liability insurance, your insurance does not cover floods, rain, or travel bins.
Let’s imagine another common but complex situation. You own a 2020 Mazda 3. You are still paying off this vehicle, and the bank requires you to maintain full coverage auto insurance with a $1,000 deductible.
You flew out of town for a business meeting and parked your Mazda in the airport parking lot for three days. But if you forget to close the window, a thunderstorm hits the town.
When you return from a trip, you find your seat soaked. The Mazda also has a strong musty smell. All the technology appears to be working and I drive the car home.
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Your full coverage policy should cover this water damage. However, the cost of professional car cleaning and restoration will likely be less than your deductible.
In this case, it makes more sense to pay for professional restoration out of pocket and exclude your insurance company from doing so. Otherwise, you’ll be creating a billing history with your insurance company, and it only takes a few claims for your insurance company to increase your rates. Ultimately, the deductible is $1,000, so you end up paying for the cleaning service either way.
It may make sense to pay for these repairs out of pocket, even if the cost of restoration is slightly higher than your deductible (e.g., $1,200). This is especially true if you already have a claim or accident on your record.
The best course of action is to first get a quote for water damage repairs and then decide if it’s worth contacting your insurance company.
Does Homeowners Insurance Cover Water Damage?
There is no easy answer to this question. Your car insurance company expects you to act like a reasonable driver. In other words, if you know a hurricane is approaching, you should avoid driving. And if your area has experienced unprecedented flooding, it’s wise to avoid flooding your streets.
In 2023, California experienced rare atmospheric rivers, unprecedented rainfall, and devastating flooding after a decade of drought. Many CA drivers had little experience driving in these conditions, and many made poor choices about driving through flowing water or flooded roads.
Expensive car accidents happen, people suffer injuries and physical damage, and car insurance companies end up paying the bills.
Other drivers then made the reckless choice of going out, exploring flooded areas, and intentionally abusing their vehicles.
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So, will your car insurance cover water damage to your vehicle if you drive irresponsibly on a flooded street? This depends on your policy, state and
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