Standard homeowners and renters insurance does not cover flood damage. Find out if you need flood insurance and learn where to get it.
Your standard homeowners policy doesn’t provide flood coverage
It’s important to note that, as a rule, homeowners and renters insurance does not cover damage from flooding. To protect your home, be sure to understand the risk of flooding and what your insurance options are.
You will need flood insurance if you live in a designated flood zone. But flooding can also occur in inland areas and away from major rivers. Consider buying a flood insurance policy if your house could be flooded by melting snow, an overflowing creek or pond, or water running down a steep hill.
Flood insurance is available for renters as well as homeowners, but a special policy is required as flood insurance—like earthquake insurance—is not part of standard homeowners coverage. Flood policies are provided by the federal government and some private insurers.
If you think you need flood insurance, don’t wait for a flood season warning on the evening news to buy a policy—there is a 30-day waiting period before the coverage takes effect.
The federal government provides flood insurance through the National Flood Insurance Program (NFIP), run by the Federal Emergency Management Agency (FEMA). While they are underwritten by the government, NFIP policies are generally sold through private insurance agents. In some areas, primary flood insurance may be available through private insurers.
The National Flood Insurance Program provides coverage for up to $250,000 for the structure of the home and $100,000 for personal possessions.
The NFIP provides replacement cost coverage for the structure of your home. This means, the policy will cover the amount necessary to rebuild your home as it was before the damage.
However, the NFIP provides only actual cash value coverage for your possessions. That means you’ll get the current value of your possessions, which may be considerably less than the cost you’ll incur to replace them, especially if they are older and have depreciated in value.
There may also be limits on NFIP coverage for furniture and other belongings stored in your basement.
There are two types of private market flood insurance:
- An increasing number of private insurers are starting to offer “first-dollar” or primary flood insurance. These policies are similar to the NFIP policy, but generally offer higher levels of coverage. To find out whether private primary flood insurance is available in your area, contact your insurance professional.
- Excess flood insurance is available for homeowners who need additional insurance protection over and above the basic NFIP policy or for those who live in a community that does not participate in the NFIP. Excess flood insurance can be purchased whether the primary policy is from NFIP or from the private market. Excess flood insurance is available in all parts of the country—in high-risk flood zones along the coast and close to major rivers as well as in areas of lower risk. It can be purchased from specialized companies through independent insurance agents, or from regular homeowners insurance companies that have arrangements with a specialized insurer to provide coverage to their policyholders.