When Do I Need It?
Ninety percent of all natural disasters in the United States involve flooding, and flood damage strikes frequently in low or moderate risk areas. Homeowners policies don’t cover flooding so—whatever your area’s risk level—learn about flood insurance protections.
Insuring yourself against a flood is a little different than other policies.
- Floods are not covered under homeowners and renters policies. Only a specific flood insurance policy will cover home flood-related losses.
Most flood insurance is administered through the federal government. Homeowners, renters, and businesses can purchase flood policies from an insurer under contract with FEMA. Federal flood insurance is available where the local government has adopted adequate flood plain management regulations under the NFIP—and many communities participate in the program.
- Flood insurance covers direct physical losses from floods and losses resulting from flood-related erosion caused by waves or currents of water exceeding anticipated cyclical levels and accompanied by a severe storm, flash flood, abnormal tide surge or a similar situation that results in flooding.
- Flood insurance coverage for the structure and contents of the home are sold separately. Buildings are covered for replacement cost, but coverage for personal property is available on an actual cash value basis only.
- The maximum flood insurance coverage amount is $250,000 for the structure of the home and $100,000 for the contents of the home. (“Excess” coverage over and above the maximums that are available from NFIP is offered by private insurers.)
- Flood losses for cars are covered under the optional, comprehensive portion of a standard automobile insurance policy.
Commercial flood insurance is available from the NFIP; it provides up to $500,000 of coverage for your building and up to $500,000 for its contents. You can also purchase what’s called “excess” insurance coverage to rebuild properties valued above those limits.
When buying flood insurance, you should remember:
- It’s easy to purchase.
- It requires a 30-day waiting period.
- It can be augmented with “excess” insurance.