Updated: October 2016
If your home isn't protected against floods, you are (unfortunately) not alone. Only 12 percent of U.S. homeowners have flood insurance, according to a 2016 poll conducted by the Insurance Information Institute.
Are the remaining 88 percent just betting that a flood won't hit their homes? Or do they mistakenly believe their homeowners policy offers protection against a flood?
In either case, there's a strong argument to get better informed.
For one, you should know that flood damage isn't typically covered by homeowners insurance. To get flood coverage, you may be able to buy a separate flood policy through the federal government's National Flood Insurance Program (NFIP). A local insurance agent can help you purchase an NFIP flood policy.
You should also understand that flood insurance isn't just for homes in high-risk areas. The NFIP says that all 50 states have experienced floods or flash floods in the past five years, and that more than 20 percent of the claims it handles come from the moderate- to low-risk regions.
So, what may a flood policy help protect? The NFIP 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 may help 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 for a vacation home.
- Maximum coverage limit: $250,000
Personal contents coverage
- What it may help 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
Equally important is knowing what's not covered by flood insurance. Here are some of the types of property and expenses that fall outside the scope of a basic flood insurance policy, according to the NFIP's summary of coverage:
- 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 coverage for your car)
In addition, you'll likely find that 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 covered 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 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.