Many homeowners do not realize that their standard homeowner policy does not include flood insurance and therefore does not cover flood damage. That is why it is so important to purchase additional insurance for floods and the damage that they cause. Flood insurance is an extra layer of coverage offered through the National Flood Insurance Program, which is administered by the Federal Emergency Management Agency. In the event of water damage from flooding, the insured homeowner will have coverage up to the legal limits for his or her property.
According to the NFIP, a homeowner’s flood insurance policy covers up to $250,000 in structural damage and up to $100,000 in content losses. A business policy covers up to $500,000 in both structural damage and content losses. When talking about flood insurance coverage, it’s important to understand what the word “flood” actually means. Many homeowners don’t have a proper understanding of the terminology and, therefore, don’t fully understand their coverage. Many people, when discussing or describing a loss, think that the words ‘flood’ and ‘water damage’ are interchangeable and mean the same thing, this is entirely wrong. In the insurance world, the terms are very different.
A flood is defined by the NFIP as, “A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from overflow of inland or tidal waters, from unusual and rapid accumulation or run off of surface waters from any source, or from mudflow.” Water damage, essentially, is everything else. This term includes the breaking or cracking of any part of an appliance or system that contains water, such as a water heater; water backup of sewers and drains; and rising water that may damage a basement. These are not covered by flood insurance.
Another critical point in the world of flood insurance concerns the basement. The only items covered in your basement are structural elements as well as essential equipment, such as electrical and HVAC systems. If you have a finished basement with things like a pool table, carpeting, a flat-screen TV or expensive woodwork, they are not going to be covered by flood insurance.
Fewer than 20% of homeowners in the United States carry flood insurance. A big chunk of Americans who do carry flood insurance are homeowners who are required to buy it if they have mortgages from federally regulated, supervised or insured financial institutions for homes within a “special flood hazard zone.”
For more information regarding this topic visit FEMA’s Flood Website or talk to your insurance provider today to find out exactly what protections your policy provides you against floods.