Flood Policy, Gulf Oil Spill, and Homeowners Coverage

June 7, 2010

We're receiving several calls on this incident from worried residents in Louisiana . Does the flood policy provide coverage for floodwaters contaminated by oil, or is the oil excluded as a pollutant? What about increased costs in removing the oil?

Florida Subscriber

The NFIP flood policy has no pollution exclusion for damage to the property from oil in the water; so if oily water comes in and the water is covered, so is the oil in the water. Even if the oil costs more to remove or makes an otherwise repairable home a total loss, the flood policy is going to provide coverage. The writers of the policy had not imagined something like the current situation in the Gulf.