Flood insurance: What to know
Flood damage is not covered under most homeowner’s insurance policies, but a separate flood insurance policy can help protect you against flood risks. Learn about flood insurance and what it covers.
Floods are the most common and expensive natural disasters in the United States, causing billions of dollars in damage to homes, businesses and infrastructures yearly. Just one inch of floodwater can cause about $25,000 of damage to your home and 90% of natural disasters in the U.S. involve flooding, according to the National Flood Insurance Program (NFIP). The most significant flood disaster to hit the U.S. with 168,200 paid losses was Hurricane Katrina. Yet despite the considerable damage flooding causes, many homeowners may not understand the importance of flood insurance coverage.
What is flood insurance?
Flood insurance can help protect homeowners and renters from the financial devastation caused by flooding. The NFIP, managed by the Federal Emergency Management Agency (FEMA), defines a flood as an overflow of water on land that is normally dry, affecting two or more acres or properties. Flooding can be triggered by various events, including tidal waters, mudslides, the overflow of inland waters and the accumulation of rapid rainfall.
Unlike standard homeowners and renters insurance policies, which usually exclude floods, flood insurance specifically covers property damage resulting from a flood. Coverage is available to communities within the U.S. that participate in the NFIP. The NFIP has tools that show flood maps and can help assess the flood risks in your area.
Several factors can affect policy rates including the age of the building, compliance with local flood ordinances, selected deductibles, coverage amount, the elevation of the lowest flood and the home’s flood risk location.
Is flood insurance required?
If you live in a high-risk flood area, your mortgage lender will likely require flood insurance. However, flooding can occur in any area under certain conditions, like heavy rain or tropical storms. According to FEMA, about 49% of counties in the U.S. have experienced floods in the past five years, and one-third of NFIP claims come from outside high-risk zones. Given these statistics, flood insurance can be essential, even for those in perceived low-risk areas.
How to buy flood insurance
Flood insurance can be obtained through any insurance company that partners with the NFIP. Check with your insurer or use the NFIP provider finder to locate an available plan. There’s typically a 30-day waiting period before coverage takes effect, so it’s recommended to not wait until a storm threat or natural event presents. There are some exceptions to the waiting period, like when obtaining a mortgage, it could be effective right away.
NFIP policies offer a maximum of $250,000 for structure coverage and $100,000 for personal property for residential properties. If a person needs flood coverage for amounts greater than the ones offered by NFIP, they may obtain excess coverage through some private insurance providers.
What does flood insurance cover?
Flood insurance from the NFIP provides two main types of coverage: structural and personal property, each purchased separately with its own deductible. This is different from homeowner’s policies where usually one deductible applies for the same loss if damages occur for both the structure and personal property. Flood insurance typically offers coverage for damages to the structure of a home and its foundation, electrical and plumbing systems, central air and heating equipment, water heaters and large kitchen appliances. It can also offer coverage for permanently installed flooring, wallboards, bookcases and cabinets. Personal property coverage extends to clothing, furniture and electronic equipment.
However, coverage for basements and crawlspaces is more restrictive and typically only applies to main structural components and big appliances like the freezer, washer and dryer. Flood policies exclude basement home improvements like carpet or finished walls and personal contents like furniture and electronics (located in the basement at the time of the flood).
Additionally, flood insurance does not cover certain damages such as sewer backup unless directly caused by a flood, nor does it cover living expenses, vehicles, outdoor property or preventable mold damage.
Other considerations about water damage
Flood insurance addresses damages caused by external flooding, but other water-related losses need additional considerations:
- Backup of sewer and drainage: Standard homeowners’ policies usually do not cover damages from sewer backup caused by heavy rain, failure of the sump pump or blockage of the drain without a backup of sewer rider or an endorsement from your insurance company that is attached to your homeowner’s policy.
- Water from windows: Water infiltration from windows (on the main floor or above) due to heavy rain is typically covered under accidental direct physical loss on a standard homeowners policy. Water damage to a basement coming from the window is typically excluded from a standard homeowner’s policy but may be covered under a flood policy in the event of a declared flood.
Talk to your insurance company if you have questions about different scenarios that cause water damage to see what coverages are available and under which policy type like flood, homeowners, renters, etc.
Flood insurance can help provide vital protection against a natural disaster that can occur at any time and any place. Understanding the basics and ensuring proper coverage can help safeguard homeowners from potentially devastating financial consequences. Standard homeowners policies have limitations and endorsements or separate policies might be necessary for comprehensive protection against water damage.
For questions on obtaining flood insurance from the NFIP, contact your State Farm® agent to see if they participate in the provider program.
