Flood Insurance: What Is It & How Does It Work?

Posted on: 8 December 2021

Your standard homeowners' insurance policy doesn't cover damage caused by floods. If a flood struck your area and destroyed your house, how would you cover the losses? If you hesitated while answering this question, it's probably time to consider flood insurance. 

As the name suggests, flood insurance is a form of property insurance that covers your home and belongings for damage caused by flooding, including heavy rains, high tides, levee dam failure, and hurricane storm surges, among other sources of natural flooding. Keep reading to learn more. 

Who Needs Flood Insurance?

You may need flood insurance if your community is a part of the National Flood Insurance Program (NFIP). The policy can be purchased through insurance agents by homeowners, commercial property owners, business owners, and renters who want to protect their homes, properties, and belongings. 

Most mortgage lenders will also require you to have a flood insurance policy if your house is in a high flood risk zone. You can use the FEMA Flood Map tool to check if you live in a flood zone. But, even if your area has low or moderate flood risk, getting flood insurance is still a good idea as flooding can happen just about anywhere. 

What Is Covered by Flood Insurance?

Flood insurance typically covers your home's structure and the contents inside your home. Your home's structure is covered under a policy known as building property coverage. If a natural flood destroys the walls or floors, this policy will cover the repair and rebuilding costs. Other things covered by building property coverage include:

  • Foundation
  • Electrical and plumbing systems
  • Central air systems, water heaters, and furnaces
  • Cooking stoves, refrigerators, and built-in appliances
  • Cabinets

On the other hand, the contents inside your home are covered under a policy known as personal property coverage. If your belongings incur water damage, your flood insurance policy will cover the cost of repairs or replacement. Some of the contents covered here include:

  • Clothing
  • Electronics
  • Furniture
  • Portable appliances
  • Washers and dryers
  • Carpeting that isn't part of the structure
  • Artwork, jewelry, and watches

After buying a flood insurance policy, it's important to check the liability limits for the contents inside your home. For example, jewelry usually has a liability limit of about $1500. If something happens to it, the insurance company will only compensate you up to $1500. Considering that these items can be pricey, you might want to check if there is additional coverage you can purchase. 

What Is Not Covered by Flood Insurance?

Flood insurance only covers natural flood damage. Therefore, if your pipes leak, causing damage all over your home, the damage won't be covered. 

Again, only selected items in your basement may be covered. For example, if the floors and walls in your finished basement are damaged, you won't be reimbursed for repairs. Personal belongings, like clothing, furniture, electronic equipment, bookcases, and kitchen supplies, stored in the basement may also not be covered. 

If you are in need of flood insurance, be sure to contact a local company for more information. 

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Mastering The Art Of Insurance Coverage

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