Thursday, June 18, 2009


Intense storms over the Pacific Ocean bring heavy rains to Washington each winter and spring. Weather conditions indicate that the risk of damage from surface water and flood is becoming more prevalent in even low to moderate flood zones.

Fireman’s Fund Insurance Co. is now offering the Surface Water and Flood endorsement to its Prestige® Home Premier policyholders in Washington. This is one of the few surface water and flood coverages available to homeowners in Washington from a private insurer.

The Federal Emergency Management Agency (FEMA) calls flood the No. 1 natural hazard occurring in all 50 states. And according to the National Flood Insurance Program (NFIP), a home is at greater risk for flood than fire. A typical home has a 26 percent chance of being damaged by a flood during the course of a 30-year mortgage, compared to a nine percent chance of fire. Washington residents may face an even greater risk of flooding this year due to wildfires. The charred ground where vegetation has burned away cannot easily absorb rainwater.

Flood insurance is rarely available anywhere in Washington except through the NFIP, which has limits of $250,000 on dwellings and $100,000 for personal property. And although most homeowners’ policies provide some coverage for backup of sewers and drains, surface water and flood is specifically excluded. The Fireman's Fund coverage option contains no such limits and can go as high as the dwelling and contents limits of the Prestige Home Premier policy.

Fireman’s Fund coverage also includes $100,000 for flood damage to any combination of the following:

  • Underground structures and equipment, such as wells and septic tanks
  • Walkways, decks, driveways and patios
  • Fences, retaining walls, seawalls, piers, bridges and docks
  • Hot tubs, spas and swimming pools

Finished basements can easily cost well over $30,000 and the contents in that basement can also run into the tens of thousands of dollars. This is well beyond the sublimits other carriers use to restrict coverage where the loss is most likely to occur. Fireman’s Fund’s Surface Water/Flood endorsement has no sublimits for real or personal property in a basement and addresses a critical customer need.

Surface water losses can happen anywhere, and are likely with the significant rain in Washington. The surface water coverage is significant since a flood has to involve two acres being inundated with water to trigger coverage on most other flood policies.

  • Ventura County (Calif.) District Attorney Gregory Totten announced that Jose Herrera (DOB 6/13/79), of Canoga Park, was sentenced to three years felony probation and 90 days in the Ventura County jail after pleading guilty to felony auto insurance fraud. He was also ordered to pay $2,322 in restitution to Alliance United Insurance Company.

  • On May 15, 2009, Herrera contacted his Ventura-based insurance carrier, Alliance United, and reported that his Jeep Cherokee was “stolen” in Los Angeles County . It was subsequently discovered that his Jeep was involved in a hit-and-run collision in Los Angeles where the driver fled the scene.

  • A private investigator, retained by Alliance United, located a witness who identified Herrera as the person who fled the scene after the hit-and-run collision. When confronted, Herrera denied being the driver and said he had two alibi witnesses who would corroborate the fact that he was somewhere else the night of the collision.

  • This suspected fraudulent insurance claim was referred to the Ventura County District Attorney's Office Auto Insurance Fraud Unit.

  • A district attorney investigator tracked down one of Herrera's alibi witnesses and when questioned by the district attorney investigator, the witness refused to lie for Herrera and told the truth about how she was asked to pick up Herrera after he crashed his Jeep and fled the scene of the accident.

  • This information led to Herrera's arrest and subsequent conviction.

  • California Insurance Commissioner Steve Poizner announced nearly $30 million in grants to local county district attorneys to help combat workers' compensation fraud, an increase of almost $1 million over last year.

    Funding for the grants is the result of an assessment on employers as determined by the Fraud Assessment Commission. Counties apply annually for these grants. The applications are reviewed by the Workers' Compensation Grant Review Panel based on a number of criteria, including the previous year's performance. The panel makes a recommendation to the Insurance Commissioner who can accept or amend the panel's recommendation. At that point, the Insurance Commissioner's final decision must be ratified by the Fraud Assessment Commission.

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