While most homeowners insurance policies provide coverage for some types of water damage, a standard policy specifically excludes damage from flooding. For instance, your policy should cover you if your home experiences sudden and accidental water damage, such as from a burst pipe. However, any water damage resulting from surface water coming into your home will not be covered. 

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Definition of a flood

A flood is defined as an overflow of water on land that is normally dry. For insurance purposes, flooding occurring on just one property is not considered to be a covered flood. Flooding needs to affect two or more properties, or occur over two or more acres. The water has to come from the rapid accumulation of surface water, overflowing tidal or inland waters, or mudflow.

Is flood insurance required?

Every homeowner can purchase flood insurance regardless of where they live. Having flood insurance can give you peace of mind.

If you live in a high-risk flood area, your mortgage lending company will require you to have a flood insurance policy. You can find out the flood risk of your home, or one you are considering purchasing, by visiting the FEMA Flood Map Service Center. Enter your property's address to determine if the home is in a high-risk, moderate-risk or low-risk flood area.

What flood insurance covers

Flood insurance covers water damage to your home and your belongings that is caused by flooding. There are two types of coverage: building coverage and personal contents coverage. 

  • Building property coverage protects your home, its foundation, plumbing and electrical systems, HVAC system, carpets, wood paneling and detached garages. 

  • Personal contents coverage protects your furniture, electronics, clothing, appliances and certain valuables.

If you have a basement in your home, there is limited coverage available. What's not covered in the basement includes window treatments, carpeting, bookcases and paneling. Drywall may or may not be covered depending on how far below the ground it is. A flood policy typically won't cover most belongings that are kept in a basement.

Where to buy a flood insurance policy

Flood insurance policies are available through any insurance agent that sells homeowners insurance. You may have two options for who issues the policy. FEMA administers the National Flood Insurance Program (NFIP). NFIP policies are underwritten by the federal government, and coverage through the NFIP is available in all 50 states. Another option is to purchase flood insurance through a private insurance company. They may offer a standalone policy, an excess flood policy or a flood endorsement to your homeowners policy.

NFIP flood policy

The NFIP offers two types of flood insurance coverage. They offer up to $250,000 in building coverage and $100,000 in coverage for building contents. Each type of coverage is purchased separately and will have their own deductible. In addition, getting a NFIP flood insurance policy will mean you must have an elevation certificate for the property, and there is a 30-day waiting period from when you apply for coverage. 

The building is covered for replacement cost, while your contents are covered for actual cash value. There is no loss-of-use coverage or loss avoidance coverage (such as the cost of sandbags).

Private insurance policy

A flood policy from a private insurance company can cover your home for up to $500,000 or more. They typically do not require an elevation certificate and have only a 15-day waiting period. 

A private insurance policy can cover both your home and its contents at replacement cost. They also include loss-of-use coverage and loss avoidance coverage.

NFIP vs private insurance 

NFIP can't cancel a policy if a home is at a high risk of flood damage. They have standardized coverage and deductibles. Premiums for NFIP policies are fairly reasonable, although they may be expensive if you're in a high-risk area.

Private insurance companies offer more building coverage than NFIP, which is a benefit for those with homes valued at a higher amount. They also offer more comprehensive coverage than NFIP, especially when it comes to personal belongings. However, a private insurance company may cancel flood insurance coverage upon renewal and may have high deductibles. Unlike NFIP, they may not offer policies at all in high-risk areas.

Conclusion

The insurance agency that handles your homeowners policy is the best place to start if you need or want a flood policy. They can answer any questions you may have about how coverage works and any optional coverages. While they can all offer you a quote for an NFIP policy, not all insurance agents work with private insurance companies that offer flood policies.

People that have property in high-risk flood areas are the ones most in need of this coverage. However, nearly any area in the country can experience flooding so it's something every homeowner should consider.