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Flood Insurance and What All Does It Cover?

What is Flood Insurance?

Flood InsuranceFlood insurance is an insurance coverage which protects home owners in the event of property loss due to flooding. Almost every region in the US is susceptible to flooding (flooding is the most common natural disaster in the US.)

Flood damage can be extremely costly to a homeowner, especially in the event that a flood does occur, and the homeowner is not insured. Most companies (and experts) claim it is better to be prepared with insurance coverage, in the event that a natural disaster does occur so that a homeowner isn't stuck paying out of pocket costs. In many areas of the country (homes near coastal and high-risk zones) flood insurance is mandatory; additionally, many apartment complexes require renters to purchase flood insurance in these areas as well.

How Does Flood Insurance Work?

Flood insurance protects a person's home from damage caused by flooding or other natural disasters such as mudslides. Many consumers are misinformed and believe that flood insurance is included in home owner’s insurance, and it is not. Since some areas of the country are very low-risk areas for flooding, standard home owner’s insurance doesn’t cover flood damage, and individuals are required to purchase separate flood insurance.

Areas which are extremely low-risk for floods, homeowner’s may not be able to purchase flood insurance. Most companies will sell it to these areas, however some companies may not insure that area, because very few, if any, consumers in that area purchase it. Individuals in high-risk areas might also have difficulty finding a private insurer. Due to this, the national government created a program offering flood insurance to extremely high-risk communities.

What Does Flood Insurance Cover?

The coverage for flood insurance varies depending on how much coverage is purchased, and whether or not you are insured by a private company, or a government created flood insurance coverage plan.

Insurance issued by the US Flood Insurance programs covers loss and damage to homes or dwellings which is caused by flooding. Building policies do not cover personal property contained within the building structure.

Government created programs cover losses of a building up to $250,000; for personal property or goods the coverage is limited to up to $100,000. If property values exceed this you must have insurance through a private company.

Insurance covers damage to the building structures (walls or foundation) as well as electric and plumbing damage. Major appliances (such as refrigerators) are also covered.

Exclusions, both in government and private policies include: money or currency, gold, or stock certificates. Cars and other vehicles are also excluded, and goods located outside the home are excluded from coverage as well. Losses in either landscaping or swimming pool damage are also excluded.

Flood insurance basically covers the dwellings structures and mechanical functions. Anything outside the home will typically be excluded.