FEMA: Insurance Applies If Oil from BP Spill Mixes with Flood Waters

The Federal Emergency Management Agency has clarified that in the event of a declared flooding disaster, flood insurance coverage will apply even if oil from the BP deep well blowout mixes with floodwaters.

The National Flood Insurance Program will bill BP for any claims it pays for covered properties affected by floodwaters mixed with oil from spill.

In a memorandum issued to insurance industry, James A Sadler, director of Claims, said that oil in flood water is not a new development. However, in order for coverage to apply there must first be a definitional flood as described in the Standard Flood Insurance Policy (SFIP). Damage caused by the oil in floodwaters is covered subject to the provisions of the SFIP.

Other stipulations provided by Sadler in the memo include:

• Coverage for commercial buildings and contents must be purchased separately and the limit for damage caused by pollutants is $10,000.
• Homes and contents are covered up to the policy limits.
• NFIP only pays for direct physical loss by or from flood.
• Condominium contents are covered to the policy limits.
• Damage to ground, soil, or land caused by flood, oil, or floodwater mixed with oil is not covered.
• There is no coverage for testing for or monitoring of pollutants unless there is a law or ordinance requiring it.
• A policyholder who recovers any money from BP must pay FEMA or the WYO back first before the policyholder may keep any of that money.

Topics Flood Energy Oil Gas