When mud finds its way into your home, damaging the structure or its contents, your ability to file an insurance claim often hinges on whether the source of the damage was a mudflow or a mudslide.
Before you seek compensation for a mud-related loss, "you need to understand the definitions in your policy," says Kevin Foley, a New Jersey insurance agent.
For someone whose property is covered in mud, the difference between a mudflow and a mudslide may seem inconsequential. Insurance carriers disagree, however. And they hold policyholders strictly to the terms set out in the policy.
Neither mudslides nor mudflows are covered through standard homeowners insurance policies, notes Karl Newman, president of the Seattle-based NW Insurance Council trade group. However, mudflows, which are byproducts of floods, are covered through flood insurance policies, which can be purchased separately.
Mudflows and mudslides: What's the difference?
According to the National Flood Insurance Program (NFIP), "mudflows are rivers of liquid and flowing mud on the surface of normally dry land, often caused by a combination of brush loss and subsequent heavy rains."
Unlike mudflows, mudslides occur when a mass of earth or rock moves downhill, propelled by gravity, says Carole Walker, executive director of the Rocky Mountain Insurance Information Association. They typically don't contain enough liquid to seep into your home, and they aren't eligible for flood insurance coverage.
To protect your home from mudflows, you can purchase flood insurance through some private carriers or through the NFIP, a division of the Federal Emergency Management Agency (FEMA). According to the NFIP, from 2010 to 2014 the average residential flood claim was more than $39,000. The average flood insurance policy premium costs about $700 per year.
Before you make a decision about buying flood insurance, you can gauge your home's flood risk by consulting FEMA's flood hazard maps.
Determining how the damage happened
If you file an insurance claim for mud damage, a claims adjuster who works for your insurance company will determine whether the damage was from a mudflow or a mudslide. If your claim is valid, the adjuster will decide how much money you are entitled to under the terms of your policy.
Foley says you're free to hire your own expert to provide information to your insurance company's claims adjuster, "but the ultimate authority, as far as the insurance company is concerned, is the adjuster."
If you disagree with the adjuster's decision, you can contact a supervisor at your insurance company and file an appeal, Foley adds. If the decision is upheld, you can take the matter to court. However, some policies obligate you to first negotiate with your carrier under the supervision of a third party, such as a professional arbitrator.
Going to court with your insurance company should be considered a last resort. Lawsuits can be expensive, and if you lose you could be responsible for the opposing side's legal fees.
No exceptions to the rule
Newman says standard homeowners insurance doesn't cover mudflows or mudslides, and there are no exceptions to the rule.
Walker agrees. In some cases, mudflows and mudslides may occur because a fire has removed the vegetation that stabilized a hillside near a home. Although fire damage is covered by standard home insurance policies, that won't prompt your carrier to compensate you for mud damage.
"I don't know of any company that would cover damage from a mudflow or a mudslide" through a standard policy, Newman says. "They exclude them for a reason. A special risk requires special coverage."
Finding coverage for mudslides
If you live in an area prone to mudslides, you may be able to buy a stand-alone policy that protects your dwelling, Newman says.
Consumers can buy difference in conditions (DIC) policies, which include coverage for mudslides, mudflows, earthquakes and floods, Newman adds. An insurance agent or broker may be able to find this coverage in the "surplus lines market." Surplus lines carriers insure perils the mainstream insurance industry doesn't, because the risk is too great.
A DIC policy may bring you peace of mind, but it doesn't come cheap. According to the RMIIA, the owner of a home valued at $300,000 typically can expect to pay $1,000 or more per year for this add-on policy.
Each DIC policy is tailored to the risks of individual homes. To set policy rates, insurance underwriters consider a variety of geological factors, such as the steepness of slopes near homes and proximity to cliffs. In some cases, neighborhoods may be so prone to earth movement that no carrier will offer coverage.