The Water's Rising: Are You Financially Protected?

What Is Flood Insurance, And How Does It Differ From Homeowners Insurance? 

A dangerous misconception could leave your home completely unprotected when disaster strikes. As Timothy Walters reveals standard homeowners insurance policies simply don't cover flooding—a harsh reality many East Tennessee and Western North Carolina residents learned the devastating way after Hurricane Helene.

"We all live in a flood zone," Walters emphasizes, challenging the common belief that only certain areas need flood protection. This critical distinction became painfully clear when countless homeowners discovered their regular insurance wouldn't cover a penny of flood damage. The conversation dives deep into what exactly constitutes "flood damage" versus regular water damage, explaining why a burst pipe that floods your basement is covered while rising river water that does the same damage isn't.

Walters breaks down the two primary flood insurance options available to homeowners: private market insurance (which often provides more robust coverage at better rates) and the government's FEMA program (which may be the only option in certain high-risk locations). He explains the coverage limitations of each, highlighting that private insurance typically allows for full replacement value coverage while FEMA programs impose caps that might leave high-value homes underprotected. 

Whether you live in a traditionally flood-prone area or somewhere you'd never expect flooding to occur, this episode delivers essential information that could protect your biggest investment. Listen now and discover if you're truly covered before the waters rise. Then subscribe to The Walters Agency podcast for more expert insurance guidance that cuts through confusion and saves you money.

To learn more about The Walters Agency visit:
https://www.brightway.com/agencies/tn/knoxville/0237/team
The Walters Agency
7009 Asheville Hwy
Knoxville, TN 37924
423-417-2070

Episode Transcript

Speaker 1 (00:00):
Many homeowners believe their standard insurance
policy covers flooding, but itusually doesn't.
Timothy Walters explains whatflood insurance actually is, who
needs it and why it matters,even outside high-risk areas.
Welcome back everyone.
Skip Mahoney, co-host, slashproducer, back in the studio
with Timothy Walters, licensedinsurance agent and owner of the

(00:20):
Walters Agency.
Timothy, how's it going, man?

Speaker 2 (00:24):
It's going very well.
Got my feet dry.

Speaker 1 (00:27):
There you go.
That's a good thing, and yoursocks too, hopefully.

Speaker 2 (00:32):
Oh baby.

Speaker 1 (00:32):
Well, timothy, one thing that is on a lot of
people's mind, especially herein East Tennessee, western North
Carolina flood insurance is abig deal.
We just had the hurricaneHelene come through last year
and wreaked havoc in an areathat normally doesn't.
You know, people that live heredon't even think about flood

(00:53):
insurance, and tons and tons ofhomes were completely destroyed
and no flood insurance.
So I thought it would beappropriate.
What is flood insurance exactlyand why do we need it?

Speaker 2 (01:08):
Well, yeah, in hurricane hell lane yeah.
That was God awful and everybodywho lives around here doesn't
need to be told about it.
Yeah, I think it was hopefullya wake up call for a lot of
people.
We have this habit and I talkto people about this all the
time.
You have the people have thishabit in East Tennessee and
Western North Carolina, even inSoutheast Kentucky, where they

(01:29):
get regular flooding because wedon't have the TVA control
systems up there.
They say, oh yeah, I live on ahill or I live above the flood
plain.
And I always tell people I saywe all live in a flood zone, all
of us.
I don't care if you're on thetop of Mount Everest, you're in
a flood zone, all of us.
You know I don't care if you'reon top of Mount Everest, you're
in a flood zone.
Now, you know, if you're in ahigh enough flood zone and it

(01:50):
floods, we're probably not gonnabe worried about insurance.
But most of us live in placeswhere if there is a flood and it
does affect our properties, ifwe don't have the correct
coverage, then it's gonna, it'sgonna eat into our pockets,
right?
We don't have that riskmitigation.
So flood insurance again, it'sa clear misconception.

(02:12):
A lot of people assume that ifthere's a flood, which means
water rising out of a river, alake or perhaps even heavy rain
pulling up somewhere against thestructure of your house,
natural water is typically notgonna be covered under your
regular homeowners insurance andthat's the insurance that's
gonna be required by yourmortgage company.

(02:34):
Most mortgage companies that Iknow of do not require flood
insurance unless you are in ahigh risk zone.

Speaker 1 (02:41):
Even this I'm done.
Why is that?

Speaker 2 (02:45):
You have to ask a mortgage guy.
I'm not sure.
I think probably because,probably because Floods,
although they do cause a lot ofdamage, especially catastrophic
damage, you know, fromhurricanes and that kind of
thing I don't think they'reconsidered a common cause of

(03:05):
loss across the entire country.
You're probably less likely tohave catastrophic flood damage
in Nebraska, for instance justto pick a place I think is dry
than, say, coastal Florida.
The lenders down in coastalFlorida they're definitely going
to require flood insurance,Maybe not so much Nebraska and
not so much historically here inTennessee, Although I have

(03:27):
noticed an uptick in lendersasking for flood insurance in
this state.
But yeah, it's not typicallygoing to be something that's
covered in your regularhomeowners insurance policy.
It has to be purchasedseparately and there's two
markets for it.
There's a private market floodinsurance which we do.
There's great companies.
It typically provides morerobust coverage and, you know, a

(03:50):
lot of times it's lessexpensive than the government
FEMA program.
But the FEMA program it doesn'thave as many restrictions and,
depending on the location, itmay be the only flood insurance
available.
So it's much more common forpeople in the coastal areas to
have FEMA, the governmentprogram, than the private flood

(04:10):
programs.
Most agents who are licensed andare able to quote flood
insurance.
They'll have access to both theprivate markets and the FEMA
market.
Actually, there's privateinsurance companies that
basically write the FEMApolicies and manage them, but of
course, if they are used, themoney comes from the government,
the feds, or the taxpayers, asI like to say.

(04:31):
So flood insurance is there.
It's not because the pot bustedyour house and flooded your
basement.
That should be covered underyour regular homeowner's policy.
If the river floods over itsbanks and wipes out the bottom
half of your house, then that'scovered under your flood
insurance.

Speaker 1 (04:51):
So typically water damage that comes from a river,
a lake, dam, busting that kindof thing or a hurricane is
considered that.
But that's good to know.
If I have a hot water heaterthat explodes in the basement
and floods the basement, that'scovered.

Speaker 2 (05:08):
Well, yeah, I mean that's not going to be covered
under a FEMA flood program.
That's going to probably becovered under your regular
homeowner's policy.
But you want to check yourpolicy first because sometimes
there can be some funnyexclusions depending on what
you're buying.
So it's always a good questionto ask what perils are covered
in your policy.
Because there's alwaysexclusions, you know, and

(05:29):
there's always stipulations, youknow.
Insurance is a contract and Idon't think most reasonable
people try to understand thecontracts they sign, but a lot
of times we get in a hurry andmaybe don't read them as close
as we should or don't askquestions when we have the
opportunity.
So if you have a good insuranceagent, you know, ask them.

(05:50):
Honestly speaking, for myselfand a lot of my people who I
know are in this business, welike it when people ask us these
questions, because we eitherknow the answer and we can
educate them, or maybe we're notsure and we got to ask and that
improves our knowledge and makesure that we're taking care of
our clients.
So never, never, feel youshouldn't be asking these
questions.
Some people they ask mequestions.

(06:10):
They almost apologetic about it.

Speaker 1 (06:12):
No, please, please, ask me these questions well, I
got to tell you, as a consumer,I'm embarrassed that I didn't
ask more questions.
When I moved into this housefive years ago, I thought
homeowners insurance is prettystandard, you know and this is a
good guy that somebody referredand I got him, not necessarily
having to do with floodinsurance, but with roof, which
we talked about in a differentepisode.

(06:33):
But it's a good thing I'm withyou on this podcast because I'm
taking good notes.

Speaker 2 (06:41):
My next insurance company is going to be I.
I'm gonna pelt them with a lotof questions.

Speaker 1 (06:43):
Hey man, we'll have you licensed before you know it,
there we go, there we go.
What is flood insurance?
Something that renters shouldalso be considering.

Speaker 2 (06:49):
You know, not really, because you know flood
insurance is really more for theproperty owners.
It's for covering damage to thehouse or to the own property of
the property owner.
So, a renter, if you haverenter's insurance, you know you
can have a renter's insurancepolicy which is going to cover
your personal property and yourpersonal liability at the rented

(07:11):
location, but it's not going tocover, of course, the
landlord's policy.
It's not going to cover damageto the structure of the house.
So I'm trying to think I don'tthink anybody's ever even asked
me about flood insurance forrenters, tenants.
That's something I hey talkabout, things you're not sure
about.
I'm going to have to go and ask, I'm going to have to ask some

(07:31):
questions.
That might be something I caneducate myself about.

Speaker 1 (07:34):
There we go.
It's an interesting questiontoo, because if you're a renter,
you would assume that yourlandlord would have some sort of
coverage for you.
But if you don't have renter'sinsurance and there's a flood
and it destroys your personalproperty, I don't think your
landlord's liable for that is he?

Speaker 2 (07:50):
No, no, Landlord.
Yeah, your stuff is your stuff.
Your landlord has noresponsibility for it.

Speaker 1 (07:56):
Wow.

Speaker 2 (07:57):
The landlord's responsibility is for the
property.
If the house is damaged,hopefully they're going to have
a policy in place that's goingto repair or replace the damage
to the house.
But if their tenant's propertyis damaged, honestly, unless the
landlord deliberately causedthe damage, that's none of their
business.

Speaker 1 (08:16):
There's a very clear demarcation the separation
between the renter's stuff andthe landlord's stuff, gotcha.
Well, what about premiums andpremiums and limits typically
structured for flood insurance?

Speaker 2 (08:30):
How are they structured Well.
So we're talking about theprivate flood insurance.
I like better because there'sno arbitrary cap on the coverage
you can have for a house.
There is a cap for what theFEMA program will provide for
one individual house, whereasthe private flood insurance
markets will typically allow youto get coverage up to the full

(08:52):
replacement value of theproperty.
So if you have a property, thecalculated replacement value is
half a million dollars, you'renot going to be able to get that
covered fully under the FEMAprogram, but you can probably
find a private flood market thatwill cover that for you of the
property owner.
So if you have furniture orother possessions in the house,
you can actually add on to.
It's an endorsement.

(09:13):
It's not typicallyautomatically included in our
flood policy, but you canactually add on.
So if you have, for instance, ahouse in a flood area that you
want to have covered but youalso have a bunch of furniture
in there that you want toprotect from a flood damage,
then you can add that coverageon there.
It just costs an extra or a lotextra depending on how much
coverage you're asking for.

Speaker 1 (09:34):
Wow, well, I'm glad I asked the question.
Flood insurance is a very deepsubject that we could talk about
forever, so maybe we canrevisit flood insurance in a
future episode.

Speaker 2 (09:46):
I like what you did there.
It's a deep subject.

Speaker 1 (09:48):
It can be.
Oh yeah, pun intended, punintended.
Well, anyway, love it, timothy.
Appreciate your expertise.
You're helping this guy out andhopefully a bunch of our
listeners as well.

Speaker 2 (09:58):
It's like anything else.
More informed consumers canonly help the markets and as an
insurance guy, as a guy who'sbeen doing this a long time, I
want my clients and the broaderpublic to be more educated about
what insurance is and what itisn't, Because there's a lot of
misunderstandings about what itis and that causes more
aggravation for everybody.

(10:19):
So we try and do what we can toget that clear.

Speaker 1 (10:23):
Absolutely, and, as a note to our listeners, keep
listening to the Walters Agencypodcast.
You'll learn some very valuablestuff.
That's going to save you somebucks, tim.
Thanks so much.
We will see you in the nextepisode.

Speaker 2 (10:36):
See you then.

Speaker 1 (10:37):
All right.