Most homeowners insurance policies specifically exclude covering damage caused by flooding. Because flooding can happen quickly over very large areas, and is extremely costly to repair, it is considered to be very high risk. Only a few inches of flood water in a home can cost thousands of dollars to repair.
According to the Federal Emergency Management Agency (FEMA), floods are the most common and most expensive natural disasters in the US. Flooding can impact thousands of homes over wide areas, particularly communities located near rivers that can rise quickly after slow-moving storms.
If you have a mortgage, your lender may require you to carry flood insurance if your home is located in a high-risk area, such as a flood zone. If your home is not in a flood zone, you probably won’t be required to purchase an additional flood insurance policy by your lender.
However, even if you aren’t mandated to carry flood insurance, you might still want to purchase a policy.
Defining flooding
Water damage in a home is sometimes covered by insurance, but only when it is sudden and accidental flooding inside the house. For example, a burst hose from a dishwasher that causes water damage in your kitchen might be covered by insurance—as long as the damage wasn’t caused by ignored maintenance. This is considered to be water damage, not flood damage.
Water that rises outside and flows into the home from outdoors is the type of flooding that is not covered. Flooding is frequently defined as “an excess of water on land that is normally dry.”
Floods can happen anywhere
Just because a home is not located in a flood plain does not mean it won’t ever experience flooding. Flooding can happen anywhere that water rises quickly—and that is sometimes well away from the streams, rivers, or other bodies of water that we usually associate with flooding risks.
Rapidly melting snow and ice can cause flooding, particularly if the ground is already saturated and the runoff has nowhere else to go. Street drains clogged with wet leaves can get blocked, sending water away from storm drains and towards homes. The sudden, drenching downpours associated with tropical storms can quickly overwhelm drainage systems as paved areas prevent water from absorbing into soil, leading to urban flooding.
These are just a handful of examples of how water can quickly rise, even in areas that are not designated as high-risk zones. Purchasing flood insurance, even if you live in a low-risk area for flooding, may be worth the monthly premium cost.
Who is required to carry flood insurance?
Those with a federally backed home mortgage such as an FHA loan and in or near a flood zone will likely be required to purchase a separate flood insurance policy as a condition of the home loan. This is to protect the lienholder, as flooding can render a home uninhabitable.
What does flood insurance cover?
Like most insurance products, it’s important to closely read and review your policy to know what it covers. The dominant provider of flood insurance is the National Flood Insurance Program (NFIP).
However, recent revisions to flood maps have updated the risks. This improved risk analysis means greater accuracy, and private carriers are now entering the market—so consumers may have more choices than before.
NFIP policies offer two types of coverage: building structure and building contents—and you’ll probably want to have both. The building structure coverage protects the home and its major systems, while the contents coverage protects your furniture, clothing, and belongings. Viewed through a lens similar to your homeowners coverage, structure coverage is comparable to “dwelling” coverage, while contents coverage is comparable to personal property coverage.
Flood insurance will only cover damage that is the direct result of flooding, and it won’t cover features of your property that are not part of the insured structure, such as landscaping, hot tubs, or pools.
Flooding and Federal Disaster Areas
Given the breadth of damage caused by flooding, homeowners might be left with the impression that when there’s a damaging flood, federal help is available. This is incorrect.
To be declared a disaster area, and therefore eligible for federal assistance, damage must be extensive. The President is authorized to designate areas for disaster assistance. One of the biggest determining factors is that the damage must be so severe that it is beyond the typical response capabilities of local and state officials.
That is a fairly high bar, and with flooding a fairly routine occurrence, homeowners should not rely on an assumption of disaster declaration as a substitute for securing appropriate flood insurance. Flood insurance will pay for damage claims caused by flooding, regardless of whether an official federal disaster is declared.
How can I purchase a flood insurance policy?
While the National Flood Insurance Program (NFIP) administers the program, policies are sold through private insurance companies. Because communities must agree to regulations and flood mitigation efforts to be a part of the program, participating communities are listed in the Community Status Book.
The simplest way to purchase a flood insurance policy, or learn more about whether flood insurance is right for you, is to contact the experts at Rate Insurance. They’ll help you find a policy and coverage that is right to protect your home and belongings from the threat of rising water.
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