Flood insurance at a glance
Last updated: January 1
Is flood insurance necessary?
In some cases, you may be required to have flood insurance. If you own a home on land that is at high risk of flooding, your mortgage lender may require you to purchase flood insurance, says FloodSmart.gov.
Flood insurance isn't just for homes in high-risk areas, though. The Federal Emergency Management Agency (FEMA) says that all 50 states have experienced floods, and that more than 20 percent of the claims it handles come from the moderate- to low-risk regions.
Who can buy flood insurance?
Flood insurance is generally available to people in communities that participate in the National Flood Insurance Program (NFIP). Flood insurance policies can be purchased through local insurance agents by homeowners, business owners and renters who want protection for their homes, buildings and belongings. (Landlords can buy separate flood insurance policies to help protect the home.)
What does flood insurance cover?
So, what does a flood policy help protect? FEMA says you can purchase coverage to help protect your home, your personal belongings, or both. Here are some of the basics for these two types of coverage:
Building property coverage
- What it helps protect: The physical structure of your home and its foundation; plumbing and electrical systems; central air and heating systems; attached bookcases, cabinets and paneling; and a detached garage (other detached structures need their own policy).
- How it typically pays out: Replacement cost basis (what it would take to repair the home in today's dollars) for a primary residence and actual cash value (which factors in depreciation) for a vacation home.
- Maximum coverage limit: $250,000
Personal contents coverage
- What it helps protect: Clothing, furniture and electronics; curtains; some portable appliances; freezers and the foods within them; and certain valuables, like art (up to a specified limit).
- How it typically pays out: Actual cash value basis (takes depreciation into account).
- Maximum coverage limit: $100,000
How do I purchase flood insurance?
A local insurance agent can help you purchase a flood insurance policy from the NFIP.
You'll typically need to wait 30 days for your policy to go into effect, though there are some exceptions. For instance, if you purchase a flood insurance policy at the same time you take out a mortgage, the insurance may go into effect immediately, according to FEMA.
What's not covered by flood insurance?
Equally important is knowing what's not covered by flood insurance. Here are a few examples of the types of property and expenses that fall outside the scope of a basic flood insurance policy, according to the NFIP:
- Moisture or mold/mildew damage that "could have been avoided by the homeowner"
- Currency, precious metals and paper valuables, like stock certificates
- Outdoor property such as decks, fences, patios, landscaping, wells and septic systems, and hot tubs and pools
- Living expenses, like temporary housing (if flood damage deems your home uninhabitable).
- Cars and other self-propelled vehicles (but your auto insurance may offer some protection for your car if you have comprehensive coverage).
In addition, flood insurance provides limited, if any, coverage for below-ground rooms like crawl spaces and basements, and their contents, the NFIP says. Some items in these spaces (like the furnace) are typically included under building coverage. Others (like the washer/dryer) are usually covered under personal contents coverage. And some items — like your personal effects — may not be covered at all when they're kept in below-ground rooms.
Talk to an agent to help make sure you're clear about the coverage details, exclusions and limitations of a flood insurance policy and to help you make the right choices for your situation.
Of course, you should also remember that a flood isn't the only potential source of water damage to a home. That's why, in addition to understanding the potential benefits of flood insurance, you should also review the coverages offered by your homeowners insurance policy.
Armed with the knowledge and insurance coverages that are right for you, you'll go a long way toward protecting your home against water damage.