Flood Insurance Policy & Coverage: What Homeowners Should Know

If you have a homeowner’s insurance policy, you’re probably wondering – does it cover flood damage? Or do you need private flood insurance coverage to be protected? In fact, standard homeowners insurance does not include flood insurance. And as flooding becomes more common, you may want to consider getting it (see what natural disasters are included in your standard homeowners insurance).

Flood damage to your home can be very expensive. Just one inch of water in an average home can cost about $25,000 in cleanup and repairs, according to the Federal Emergency Management Association (FEMA). One foot of water can cost more than $44,000 in restoration costs. And those figures don’t include the replacement costs of damaged personal possessions, which can cost tens of thousands more. To be covered for those types of events, a homeowner must purchase a separate flood insurance policy. 

Table of Contents

• What does flood insurance cover?
• What is not covered by flood insurance?
• Who needs flood insurance?
• How can I purchase flood insurance?
• How much does flood insurance cost?

What does a flood insurance policy cover? 

Flood insurance covers both your home and your personal property (each has different limits and deductibles) from water damage caused by a flood. 

Building coverage includes:

• Foundation 
• Electrical and plumbing systems
• Furnaces
• Water heaters
• Cooking stoves
• Refrigerators
• Built-in appliances
• Carpeting (permanently fixed over the unfinished floor)
• Central air systems
• Detached garages
• Permanently installed paneling, bookcases, and cabinets

Contents coverage includes:

• Furniture
• Clothing
• Electronic equipment
• Portable microwaves and portable air conditioners
• Dishwashers, washers, dryers
• Carpeting not included in-building coverage

A flood insurance policy will also protect your valuable items, such as artwork or furs. However, the amount of compensation usually goes up to $2,500 so you may need to check if there’s additional protection available.

Typical renters and homeowner’s insurance policies do not cover flooding. Your homeowner’s insurance policy will usually cover water damage from a burst pipe, but not flooding from heavy rain, storm surge, or other floodwaters. Look at this interactive map to see the flooding history in your area. If you live in a high-risk flood zone, it would be wise to purchase flood insurance. In the United States, this type of insurance is backed by the government-run National Flood Insurance Program(NFIP).

What is not covered by flood insurance?

A flood insurance policy protects you against flooding but there is a list of exclusions. According to NFIP, it applies to:

• Property located outside of an insured home (like patios, hot tubs, fences, or swimming pools)
• Cars (you need separate insurance to protect your car and also purchase comprehensive coverage) 
• Currency, stock certificates, and valuable papers
• Additional living expenses while your home is uninhabitable or being repaired
• Personal belongings stored in a basement

An area underneath the first floor of your home, like a basement, or crawl space, isn’t fully protected. Property coverage usually protects dryers, washers, portable air conditioners, and certain types of food freezers. If you store other personal belongings in your basement, such as clothing, they won’t be covered by your flood insurance policy. Structural coverage covers drywall, the foundation, staircases, insulation, central air conditioners, and electrical switches.

Also, coverage depends on the source of flooding. If the damage was caused by an excess of water after a natural disaster, your policy will protect you. But if a pipe breaks or there’s a sudden leak in the plumbing causing any losses, it will be covered by your standard homeowners policy. However, if the pipe broke due to your negligence or its age, you may have problems with filing a claim. You should carry out proper maintenance to make sure the plumbing system in your home is working properly. Otherwise, your insurance provider may deny paying out a reimbursement. Also, if water backs into your home from an outside sewer or drain, you would need to supplement your home insurance policy with sewer or water backup coverage.

Who needs flood insurance?

If your home is in a high-risk flood zone and you have a mortgage, your mortgage lender will require you to purchase flood insurance. You can search your home address at Flood Tools or on the Federal Emergency Management Agency‘s Flood Insurance Rate Map to learn the specifics of your flood risk. 

The Flood Insurance Rate Map may rank your location as “Area of Minimal Hazard,” or “0.5 PCT Annual Chance of Flood Hazard,” or even “Special Flood Hazard Area.” 

Even if your mortgage lender doesn’t require flood insurance, you may still need it. One reason is that the flood insurance maps are based on 100-year floodplains, but changes in the environment, as well as manmade developments, are leading to changes in the flood zones. 

For instance, current floodplains in the United States are expected to grow by about 45 percent by the end of this century, according to FEMA research. So just because your home wasn’t in a high-risk flood zone when you purchased it, that doesn’t mean it may not be at high risk for a flood now. 

As the sea level continues to rise, new commercial and housing developments change the landscape, and we experience more extreme weather events, flooding may be more likely in your area than it once was. About one-third of flood insurance claims occur at homes that are not included in the high-risk flood zone, according to research.

How can I purchase flood insurance? 

While flood insurance is backed by the government through NFIP (floodsmart.gov), you have to purchase it through an insurance company or an insurance agent. About 80 different insurers partner with NFIP to provide flood insurance.

Your licensed Gabi agent can help you find an insurance company that offers this type of policy and talk you through what flood insurance covers and its coverage limits.

How much does flood insurance cost? 

The amount you’ll have to pay for flood insurance depends on the flood risk to your property. The average flood insurance policy costs about $700 per year, but many homeowners pay much less than that if their homes are at lower risk for floods. In many cases, homeowners pay about $36 to $40 per month to protect their homes from flood damage. 

If you’re thinking about flood insurance or have questions about your existing coverage, email advisors@gabi.com for assistance.