Standard Insurance Does Not Cover Floods

As this article points out, a standard homeowners policy does not cover floods, and Seattle only has to reimburse for the depreciated value of belongings that were destroyed. I worked at an insurance company and I believe that most insurance companies will give you the depreciated value unless it says otherwise in your policy, if somebody knows differently let me know.

I believe in this case the city should do the right thing and not strictly adhere to the depreciated value thing. Most people do not have flood insurance because they don't expect three feet of water to flow through the city streets, and it is a good assumption as it hasn't happened in that area before. This was caused by the city and residents were unprepared for it. It would be different if the city told them this could happen, but they didn't. Instead most of the homeowners will be stuck with big out of pocket expenses.

As an aside, most homeowners policies don't cover earthquake damage either, so if you are worried about the next big one you may want to invest in an earthquake policy.