Flood Insurance Coverage

Most homeowners insurance does not cover flood damage. While every homeowners, condominium, and renters’ policy covers fire damage, floods are four times more likely to occur than fires. This is why flood insurance is a separate policy that can cover buildings, the contents in a building, or both. It is important to protect your most important financial assets — your home, your business, and your possessions — from flood damage.

The National Flood Insurance Program (NFIP) facilitates flood insurance to property owners, renters, and businesses, and having this coverage helps them recover faster when floodwaters recede. The NFIP works with communities required to adopt and enforce floodplain management regulations that help mitigate flooding effects.

Flood insurance is available to anyone living in one of the 23,000 participating NFIP communities. Homes and businesses in high-risk flood areas with mortgages from government-backed lenders are required to have flood insurance. You can also view flood zone maps to assess your risk.

Why Do You Need Flood Insurance Coverage?

Your homeowner’s policy does not cover floods. Floods are specifically excluded. Flood insurance covers damage to a building and contents due to flood, flood-related erosion, or mudslide.

Flooding can happen anywhere at any time. Poor drainage systems, summer storms, melting snow, neighborhood construction, and broken water mains can all result in flooding. Even though flood insurance isn’t required for your property, flooding can happen to anyone.

From 2014 to 2018, policyholders outside of high-risk flood areas filed over 40 percent of all NFIP flood insurance claims. They also required one-third of federal disaster assistance for flooding. Meanwhile, property owners in the moderate- to low-risk flood areas are eligible for lower-cost Preferred Risk Policies (PRPs). The PRP facilitates the same building and contents coverage at a more affordable price.

If you are a renter, it’s likely your landlord has flood insurance that covers the building, but not its contents. Affordable, contents-only flood insurance will help you protect the items inside of your unit in the event of a flood.

Don’t wait for a flood warning on the evening news to buy a policy — there is a 30-day waiting period before the coverage takes effect.

Types of Flood Insurance

Whether you’re a homeowner, business owner, or renter, the NFIP offers flood insurance coverage to help you protect the life you’ve built. Work with your insurance agent to learn more about coverage amounts, deductibles, and policy costs.

For homeowners:

If you own your home – including condominiums and townhouses – the NFIP offers flood insurance policies to cover your home’s structure and belongings. The NFIP facilitates coverage for up to $250,000 for the structure of the home and $100,000 for personal possessions. This includes replacement cost coverage for the structure of your home, but only actual cash value coverage for your possessions.

Replacement cost coverage pays to rebuild your home as it was before the damage, while actual cash value is replacement cost coverage minus depreciation. This means that the older your possessions are, the less you can expect to receive if they are damaged. There may also be limits on coverage for furniture and other belongings stored in your basement.

– What’s covered: Your foundation, electrical and plumbing, finishings, appliances, electronics, personal belongings, and more.
– Coverage limits: $250,000 for the building and $100,000 for the building contents. These are typically purchased separately with separate deductibles.
– Live outside of the high-risk flood zone? Ask your agent about discounted flood insurance rates.

For business owners:

If you’re a business owner, the NFIP offers commercial flood insurance policies to help protect your business’s structure and equipment.

– What’s covered: Your foundation, electrical and plumbing, finishings, equipment, furniture, inventory, and more.
– Coverage limits: $500,000 for the building and $500,000 for the building contents. These are typically purchased separately with separate deductibles.
– Work outside of the high-risk flood zone? Ask your agent about discounted flood insurance rates.

For renters:

If you’re a renter, the NFIP offers affordable flood insurance to protect the things you care about in the event of a flood. Ask your landlord to be sure he/she has coverage for your building.

– What’s covered: Your furniture, clothes, television, computers, rugs, artwork, and more.
– Coverage limits: $100,000 for contents-only coverage.
– Starting policy costs: $99/year

Excess flood insurance is also available for those who need additional insurance protection over and above the basic policy, or for those whose community does not participate in the NFIP. Depending on the amount of coverage purchased, an excess flood insurance policy will cover damage above the limits of the federal program on the same basis as the federal program – replacement cost for the structure and actual cash value for the contents.

How to Purchase Flood Insurance

To purchase flood insurance, make sure to plan ahead as there is typically a 30-day waiting period for an NFIP policy to go into effect, unless the coverage is mandated it is purchased as required by a federally backed lender or is related to a community flood map change.

No home is completely safe from potential flooding. When just one inch of water in a home can cost more than $25,000 in damage, flood insurance can be the difference between recovery and financial devastation.

You can contact us to review your policy, get a new quote or discuss available discounts by calling us at 541-482-0831, or request a quote online.