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More on Home Insurance
Flood insurance protects your home and personal belongings against flood damage, but certain types of property aren't covered by a standard flood policy.
A standard homeowners insurance policy won’t cover damage from flood disasters
If you live in a flood-prone area, you’ll want to protect your home and personal belongings with flood insurance
Flood insurance covers your home, its foundation, and contents like your furniture, clothes, and jewelry from flood damage
Flood policies usually provide limited coverage for basements
Flooding is the most expensive and common natural disaster in the U.S., affecting homes in every corner of the country, but many people don’t know that homeowners insurance won’t cover damage caused by floodwaters. If you live in a flood-prone area, you will want to consider taking out a flood insurance policy to cover your home and personal belongings against this costly disaster.
Most major homeowners insurance providers offer flood insurance through the National Flood Insurance Program (NFIP), a federal government program with two types of policies:
You have the option of acquiring one or both types of NFIP policies. If your home is mortgaged and you live in a high flood risk area, your lender may require you to get building coverage to protect your home. If your home needs more coverage than the $250,000 limit offered by the NFIP, many insurance companies offer their own private flood insurance product that could provide you with higher limits and broader coverage.
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With flood insurance, you’re covered for direct physical flood damage, but what exactly is a flood? The NFIP defines a flood as the following:
A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property).
There are many causes of flooding, including overflow of lakes, rivers, or coastal bodies of water; accumulation of surface water from rain or groundwater; and mudflows on the surface of normally dry land.
Keep in mind that water accumulation from an exploding pipe or water heater — even if it literally floods your house — is not considered a flood. That means water damage caused by leaks or sewage and sump pump backups aren’t typically covered by flood insurance. However, your homeowners insurance should allow for add-ons, including water backup and sump pump coverage, that cover your home and belongings from plumbing-related water damage.
Flood insurance covers any direct physical damage that was caused by a flood. That could mean damage caused by a mudslide or sewer backup if the mudflow or backup are a direct result of a flood event.
As we touched on earlier, a standard flood insurance policy has two coverage types: building property coverage and personal contents coverage.
Your maximum coverage limit for building property coverage under NFIP plans is $250,000 and you’re reimbursed for the home’s replacement cost when you file a claim. With building coverage, the following parts of your home are covered.
Your personal contents coverage protects the stuff inside your house and typically needs to be added separately to complement your building coverage. Your maximum reimbursement amount with the NFIP plan is $100,000. With personal contents coverage, the following items are covered.
The following types of hazards and property types are typically not covered by the building or personal contents portion of a flood insurance policy.
Additionally, NFIP flood insurance has limited coverage for areas below the lowest elevated floor, like your basement, crawlspace, or bomb shelter. Certain types of property and home features not covered in your basement include:
The flood insurance marketplace — long considered too risky for private insurers — has taken off in recent years and grown more competitive, as carriers have more sophisticated risk modeling and predictive analytics to assist them in underwriting.
In fact, according to a National Association of Insurance Commissioners (NAIC) study, over 120 insurers wrote their own private flood insurance in 2018, up from 90 insurers in 2017, and 50 in 2016. Additionally, a new rule that went into effect in July 2019 could be a boon to the private flood market, as it would allow mortgage companies to accept private flood insurance instead of NFIP plans (in areas where NFIP plans are currently mandatory).
If private flood insurance is available in your area, you may want to consider one over an NFIP plan. For one, NFIP policies only cover your home and personal property, and your coverage amounts are limited. As climate change intensifies and flood events possibly become bigger and more catastrophic, you’ll want insurance that can cover a full rebuild of your home. The $250,000 building coverage offered by the NFIP may not be enough.
With private flood insurance, you generally have coverage limits that are as high as what you’d have for homeowners insurance, and private flood plans typically include additional protection, like loss of use coverage. You may also find that flood insurance is cheaper than NFIP coverage — giving you both higher quality and more affordable flood protection.
About the author
Pat Howard is an Insurance Editor at Policygenius in New York City, specializing in homeowners insurance. He has been featured on Property Casualty 360, MSN, and more. Pat has a B.A. in journalism from Michigan State University.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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