It’s impossible to live in a home that doesn’t have any risk to the potential of flooding. It doesn’t take more than one inch of water that finds its way in a home to cause damage. Recent data indicate that the risk of flooding across the United States has doubled the number of properties that are susceptible to flood damage. Having a flood insurance policy is likely a good investment for homeowners to protect themselves from this risk. But what does flood insurance cover? It may be surprising to learn that insurance doesn’t just protect the homeowner from flooding that’s caused by heavy rain. We will explore this issue and more.
Coverage Of Flood Insurance
As a type of property insurance, flood insurance offers protection for the dwelling of a homeowner from losses that are a result of water damage from flooding. Heavy or extended rain, coastal storms, storm drainage systems that are blocked, levee dam failures, and melting snow are among the types of flooding that are covered.
A supplemental insurance policy must be obtained by those who wish to protect their homes from flooding. Homeowner’s insurance policies have basic hazard insurance coverage. Typically, this will cover the interior water damage for a home, which could include a burst pipe or rainstorms and other weather events. Flood-prone areas that have a higher risk for certain types of natural disasters have to get special coverage.
How Is Flood Insurance Classified?
Flood insurance is classified as a type of catastrophe insurance, which is intended to protect residents and businesses from natural disasters (earthquakes, hurricanes) and human-made disasters (terrorist attacks). These types of events have a low probability of occurring but can be financially catastrophic events. Policies are available for both commercial and residential properties. Flood insurance essentially works the same as other types of insurance.
An annual premium is paid by the property owner, which is determined by the degree of flood risk for the property and the deductible that is selected. If an external event occurs that causes the property or the contents inside to be destroyed or damaged, the policy would pay up to the limit amount to the property owner to repair or rebuild the dwelling.
The majority of flood insurance is offered through the federal government’s National Flood Insurance Program (NFIP). Communities that participate in this program are offered flood insurance plans and rates, while private insurers offer the policy itself. The NFIP-designed floodplains map indicates areas where flood insurance is available by this program. There are two policies that are available through the NFIP program: building coverage and content coverage. Property owners can purchase both policies or one.
Building Coverage
The policies set by the NFIP have a maximum limit of $250,000 for building coverage for residential properties. Businesses have a maximum of $500,000 for building coverage. Other coverage options are also available for property owners who, for example, want to insure their property for higher amounts. These types of policies must be sought out by the property owner. Below are examples of building coverage with an NFIP flood insurance policy:
- Your property and the foundation
- Garages (detached); 10 percent limit of your home policy
- Window blinds
- Foundation walls
- Anchorage systems
- Staircases
- Water-well tanks and pumps
- Solar energy equipment
- Built-in appliances like dishwashers
- Refrigerators and cooking stones
- Plumbing and electrical systems
- Permanently installed carpeting, paneling, bookcases, wallboard, and cabinets
- Water heaters
- Debris removal
- Furnaces
- Fuel tanks
Contents Coverage
Residential properties have a maximum limit of $100,000 in contents coverage under NFIP policies. The maximum limit for businesses is $500,000. Contents that are typically protected with contents coverage include:
- Curtains
- Washer and dryer
- Microwave oven
- Portable dishwashers and microwaves
- Window and portable air conditioners
- Your freezer and frozen food within it
- Carpets (not covered by your building coverage)
- Original artwork, fur, and other valuables (maximum of $2,500)
- Clothing, furniture, electronic equipment, and other personal belongings
Please note, the actual cash value is what is paid for personal possessions claims. You do not get paid the amount that the possession cost to purchase originally.
What Is Not Covered?
Flood insurance is intended to protect property owners from losses that are directly the result of flooding. For example, if a sewer backup occurs but is not caused by flooding, the policy would not cover the damages. Other belongings that aren’t generally covered include:
- Cash
- Precious metals
- Plants
- Septic systems
- Decks
- Patios
- Fences
- Hot Tubs
- Swimming pools
- Cars
Talk To The Knowledgeable Flood Insurance Agents At Merchant Family
Flood insurance protects your home and belongings when a natural disaster strikes. If you have questions about flood insurance, contact the experts at Merchant Family Agency. We’re here to help you understand how flood insurance works, and we will recommend the policy that meets your needs. Call us at 407-707-6418 or request a quote online today.