Flood Insurance: Protecting Your Home and Property Against Disasters

Unlike homeowners or commercial property insurance that protects property owners against multiple perils, flood insurance protects against a single peril – flooding.

Water can enter a building in various ways, and damage by flooding is a particular type of water damage. Water that enters a building from any source can cause a lot of damage in a short period.

While insurance coverage is available, it works differently than residential property insurance. We’ll explain what flood insurance is, why you may need it, and what it does and doesn’t cover.

What Is Flooding and Flood Insurance?

A simple definition of flooding is an overflow of water over land that’s normally dry. Flooding is a temporary situation where water inundates two or more acres of land or two or more properties. Essentially, flooding is water that enters buildings from the surface of the ground as opposed to a leaky pipe or water that backs up through sewers or drains.

Flood insurance is available through the National Flood Insurance Program (NFIP) which was created as part of the National Flood Insurance Act of 1973. The goal of the program is to reduce future flooding and help protect property owners. Flood insurance is available for residential and commercial properties.

Communities must be designated a federal disaster area before property owners in that area can purchase flood insurance. The NFIP establishes flood zones based on flood maps that determine how susceptible an area is to a flood.

Why You Need or Want Flood Insurance

Depending on the property, property owners may need or want to purchase flood insurance. Property owners who have a government-backed mortgage must purchase flood insurance if the property is located in a flood zone.

Where mortgage lenders don’t require flood insurance, property owners may opt to purchase it to give them peace of mind. The following statistics may motivate a property owner to purchase flood insurance:

• Flooding isn’t covered under a traditional home insurance
• Weather patterns have been changing due to climate change issues.
• Floods happen almost daily somewhere in the United States.
• All 50 states and Washington D.C. experienced some flooding in 2021. (Pew Research)
• One inch of water can cause $25,000 in damage to a property. (FEMA)
• Flooding is unpredictable.

Property owners who are interested in purchasing flood insurance should understand what flood insurance includes and excludes as well as other nuances about this type of coverage.

What Does Flood Insurance Cover?

Flood insurance has two basic coverages – coverage for the structure and coverage for the contents. There are separate deductibles for the structure and contents, and the claims are separate.

Building coverage includes the following items:

• Systems that service the building (plumbing, electrical, heating, air conditioning, etc.)
• Appliances used to service the building (water heaters, sump pumps, water pumps, etc.)
• Basic appliances (refrigerators, dishwashers, stoves, etc.)
• Foundational walls and staircases
• Window blinds
• Built-in bookcases, wallboard, paneling, and cabinets
• Detached garages
• Carpets that are permanently installed over an unfinished floor.

Contents coverage includes the following items:

• Personal belongings and furniture
• Washing machines and dryers
• Portable appliances (microwaves, air conditioning units, dishwashers, etc.)
• Freezers and their contents
• Carpets
• Original artwork and furs (up to $2,500)

The structure may be covered for replacement costs or actual cash value. Contents are always covered for actual cash value.

Commercial properties are eligible for up to $500,000 of coverage on buildings and $500,000 on contents. Residential property owners can get up to $250,000 on the building and $100,000 for contents.

What Flood Insurance Doesn’t Cover

Flood insurance carries exclusions just as other types of insurance policies do. Flood insurance doesn’t cover the following:

• Mold or mildew damage that could have been prevented
• Damage due to earth movement
• Contents of a finished basement
• Basement walls, floors, and ceilings
• Property outside the building (septic systems, swimming pools, wells, trees, etc.)
• Additional living expenses (temporary housing, transportation, meals, etc.)
• Loss of use of the property
• Losses due to business interruption
• Currency, valuable papers, precious metals
• Cars, car parts, and some self-propelled vehicles

Flood insurance policyholders should be sure to review all exclusions and conditions as listed in the policy.

Where Can I Get Flood Insurance?

While flood insurance coverage comes from the federal government, only licensed insurance agents may sell it. In recent years, private insurance companies have been allowed to sell flood insurance, as long as policies provide the same coverage the NFIP covers at a minimum.

Most flood insurance applicants must wait 30 days before flood coverage goes into effect, although there are exceptions. Property owners may purchase a limited amount of flood insurance if the community is in the initial phase of participating in the NFIP. Also, new property owners may get flood coverage when they take out a mortgage on a property that requires flood insurance.

To get more answers to how flood insurance can protect your home, contact one of our licensed agents at Leap Carpenter Kemps Insurance Agency at 209-384-0727.