Floods are the most common natural disaster in the U.S. The Federal Emergency Management Agency (FEMA) estimates flood damage costs $8.2 billion per year. A report by the environmental action group, First Street Foundation, finds the expected loss in the U.S. to be an estimated $20.3 billion annually.
Just one inch of water in a home can cause more than $25,000 in damages. Because of devastating losses like these, the National Flood Insurance Program (NFIP) was created in 1968 to protect property from these losses. The NFIP’s mission is to share the risk of flood losses through flood insurance and reduce flood damage by restricting floodplain development.
Standard property insurance, such as homeowners insurance and renters insurance, typically does not cover flood damage. Flood insurance is a separate policy for covering direct physical losses to a home’s structure and contents.
Determining the cause of the flood is essential when it comes to insurance coverage. A flood, in simple terms, is a temporary excess of water on land that is normally dry. The flood must affect two or more acres of land or two or more properties. For example, flood damage resulting from a sewer backup is typically covered by flood insurance if the backup is a direct result of flooding. However, if the sewer backup is not the direct result of a flood, the damage is not covered by flood insurance.
What Does Flood Insurance Cover?
The NFIP offers two different types of coverage: building and personal contents. Each type of coverage is usually purchased separately. Together, the flood insurance policies provide a way to protect both a home and the homeowner’s belongings.
Building Coverage
Building coverage mainly deals with permanent home infrastructure. The maximum coverage limit is $250,000. Items usually covered include:
- Electrical systems.
- Plumbing systems.
- Furnaces.
- Water heaters.
- Refrigerators, stoves, and other built-in appliances.
- Permanently installed cabinets, bookshelves, and panels.
- Window blinds.
- Detached garages.
- Foundation walls and staircases.
Content Coverage
Content coverage protects less permanent property. Items usually covered include:
- Clothing.
- Furniture.
- Washer and dryer.
- Curtains.
- Portable or window air conditioners.
- Microwave.
- Valuables like original artwork and furs (up to $2,500).
Related: NFIP Summary of Coverage
What Isn’t Covered by Flood Insurance?
Building and personal content insurance are designed only to cover the building structure and personal property. Some of the other flood-related expenses that are not generally covered in these policies include:
- Temporary Housing Expenses. If the homeowner needs temporary housing while their property is being repaired after a flood, an NFIP policy does not cover these and other living expenses incurred during repairs.
- Property Outside the Insured Building. NFIP only covers property inside the insured building. External features like walls, septic systems, landscaping, fences, seawalls, decks, patios, hot tubs, swimming pools, and such are not covered.
- Business Interruption. For commercial properties or homes used for business, flood insurance does not cover financial losses caused by business interruption.
- Cars and Other Vehicles. Cars, self-propelled vehicles, and their parts are not covered by flood insurance.
- Personal Property Kept in Basements. Personal property stored in a basement is not covered under the NFIP program, such as clothing, furniture, and electronic equipment.
- Currency and Precious Metals. Currency, valuable papers, and stock certificates are not covered by flood insurance.
For specific questions about flood insurance coverage, talk to your insurance agent and also visit FloodSmart.gov.
Coverage Limits
Residential properties can secure limits of up to $250,000 for building coverage and $100,000 for contents coverage. Commercial properties can secure limits of up to $500,000 for building coverage and $500,000 for contents coverage. Separate deductibles apply for the building and contents coverage.
Related: What Is Business Flood Insurance?
High-Risk Flood Areas
While most areas are at risk of flooding, the risk of flooding can change over time because of new construction and development, weather patterns, and other factors. The NFIP program divides areas into three risk groups: high, moderate, and low risk.
These risk categories will affect the price of coverage. Additionally, flood insurance is mandatory for homes situated in a high-risk flooding area with a government-backed mortgage.
Flood Map Zones are used to determine policy costs and requirements and can be accessed online. Users can enter a location or address and access an interactive map that lists flood hazard information for their property. Since the risk of a flood can change over time, homeowners should consult the ABC Dennis Insurance Agency to learn about the insurance options for their area.
Conclusion
Floods are an increasingly common hazard for U.S. homeowners and renters. Depending on the area and type of mortgage, flood insurance may be mandatory. Standard homeowners and renters insurance does not provide flood coverage.
ABC Dennis Insurance Agency
ABC Dennis Insurance provides clients with flood insurance to meet their specific needs. If you have not reviewed your flood insurance this year, please call our office at (813) 949-7765 or email us.
Besides flood insurance, we can help with all your insurance needs. As an independent agency, we find the best insurance coverage with the most competitive rates. So, we shop multiple insurance carriers to find the coverage that best fits our customers’ every need.
