When Waters Rise Flood Insurance for Condos

When is a flood not a flood? That’s a serious question for Chicagoland’s residential communities. Even if they have flood insurance, damage caused by heavy rains and backed-up sewers may not meet the National Flood Insurance Program (NFIP) definition of a flood—and that can mean financial devastation for condo or co-op owners who thought they were fully covered.

“Flood insurance covers direct physical losses by flood and losses resulting from flood-related erosion caused by heavy or prolonged rain, coastal storm surge, snow melt, blocked storm -drainage systems, levee dam failure, or other similar causes. To be considered a flood, waters must cover at least two acres or affect two properties,” says Loretta Worters, vice president of the Insurance Information Institute (I.I.I), a non-profit trade association sponsored by the property-casualty insurance industry.

For a flood-insurance claim, “You have to prove that the water came from a river, and not from rain or the sewer system,” says Lori Pastore, vice president of the DeWitt Stern Group insurance agency in Chicago. “Chicagoland is more susceptible to sewer backup than actual flooding. Sewer backup is addressed under a homeowners, condo association or commercial policy.”

Most Notable Floods

Although heavy rains are to blame for most Chicagoland flooding, top honors among Chicago floods in modern times goes to the famous “underground flood” of April 13, 1992. A wall beneath the Chicago River collapsed letting water pour into a network of municipal utility tunnels and filling basements all over the downtown Loop with more than 250 million gallons of water.

Electricity was shut off in much of the Loop. Trading halted on the Chicago Board of Trade and Chicago Mercantile Exchange, with global repercussions. Water Mold and Fire, a restoration company serving the Chicago area, says the mishap cost close to $2 billion. That was bad enough, but in 1992, relatively few people lived in the Loop. Today, many former office buildings in the area have been converted to residential use, so if a similar disaster occurred now, the cost in terms of dollars and property would likely be far higher.

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