An introduction to flood insurance

There are a number of perils, types of things that can happen to your home, that aren’t covered by your home policy.  The same is true for renters, condo and town home policies.  One of those perils is flood.  Hurricane Sandy, and even Irene from 2011 are great reminders that flooding happens.  Damage to your home and even your personal property or contents is not covered if it’s lost or damaged by a flood.

Flood insurance is provided through the National Flood Insurance Program which was created by Congress in 1968.  As long as your community participates in the NFIP, homeowners, renters & businesses can obtain flood insurance through an insurance company that partner with the NFIP.  If your community does not partner with the NFIP, flood insurance is still available but it can be costly.

Flood insurance protects your home and contents in the event your home is damaged due to flooding.  Flooding is not damage caused by a leaking water pipe however massive.  Flooding is defined as:

  • Rising water  caused by rivers, lakes & streams overflowing their banks (this was most of the damage from Hurricane Irene)
  • Rising water from heavy rains that enters a home
  • Tidal surge (Hurricane Sandy)

Flood insurance can be purchased for the building without coverage for the contents.  It can also be purchased for the building with coverage for the contents.  Building coverage includes:

  • The insured building & it’s foundation
  • Electrical & plumbing systems
  • Central air conditioning equipment, furnaces & water heaters
  • Refrigerators, cooking stoves, & built-in appliances such as dishwashers
  • Permanently installed carpeting over unfinished flooring

Contents coverage includes:

  • Clothing, furniture & electronic equipment
  • Curtains
  • Portable & window air conditioners
  • Carpeting that is not already covered in property coverage (throw rugs, etc.)
  • Clothing washers & dryers

The building coverage is usually purchased as replacement coverage.  If you have a mortgage, your mortgage company will insist you buy replacement cost coverage.  Since actual cash value coverage is available, please confirm which one you’re getting.  The time to find out is not at the time of a claim.  Personal property coverage is always valued at ACV.  Deductibles are usually in dollar amounts such as $1,000 up to $5,000.  A low deductible means the policy will cost more.  A higher deductible means the flood coverage will cost less.

There is a waiting period for flood insurance, if it’s not being purchased in conjunction with buying a home.  The waiting period is 30 days.  This is to keep someone from buying a flood policy only when a storm is approaching.  If your home is in an area where you could be impacted by a flood or tidal surge, don’t put it off!

Who needs flood insurance?  Obviously if you’re in a high risk area and have a mortgage, your mortgage company will require you to have flood insurance.  No flood insurance means no loan.  If you’re not in one of these areas, we typically recommend flood coverage for:

  • Coastal homes or homes near the coast (think Houston)
  • Homes adjacent to a stream, creek, river or lake
  • Homes lower than a dam
  • Homes in areas susceptible to mudslides
  • Homes near a dry wash

Next week we’ll examine ways to save on flood insurance if you’re in a mandatory area.  Do you have a question about flood insurance?  Post it in the comments section below or on our Facebook page and we’ll get you an answer.

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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