Flood Insurance


Flood insurance insures your property against damage due to a flood.

When considering buying a home, making sure you have all the necessary insurance coverages can be daunting. If your home is near a body of water, you should check whether you need this insurance. If your home is in a flood risk area, the U.S. government mandates federally insured lenders to require that homes in those areas have this type of insurance.


What does it cover?

Note that flood insurance is a separate policy from your homeowner’s or renter’s insurance.  It is generally broken down into two categories. The first category covers damage to the building itself. This means that your home structure, essential home systems like plumbing or electrical systems, and attached furniture would be covered in the event of a flood.

The second category is damage to personal belongings. The amount an insurance company will cover depends on your policy and the specific payouts for your claim. Be sure to thoroughly research so you understand your coverage.


What does it not cover?

Having this insurance does not mean that everything in and around your home will be covered in this case of an emergency. For example, many policies do not cover any outside property. This may include gazebos, deck furniture, pools, spas, and even septic tanks.

It is also critical to note that this insurance usually does not include anything below-ground.  So, if you have a basement or crawl space, it is best not to put any valuables that you’d like to replace if it gets lost or destroyed.  A few other items not typically covered by this insurance include vehicles, precious metals, and currency. It also doesn’t cover costs of living due to displacement caused by the flood.

Some insurance companies add an “avoidable damage clause” to certain types of damage they deem was not due to the flood.  Make sure you read and agree with the fine print in your policy.


Who needs flood insurance?

You must definitely have this type of insurance if you live in a flood risk zone.  You can search your property’s address on the FEMA Flood Map Service Center website.  Even if your address is not located in a flood zone, it might be wise to consider it for your home.

According to government statistics, more than 20% of all insurance claims come from outside flood risk zones. For example, if there is a plumbing malfunction in your home that results in a flood, this insurance may come in handy.

It is also recommended if you live in a state that has widespread wildfires.  This is due to the increased likelihood of mudslides and flooding after a wildfire.

For more information on flood risk and how to protect yourself, refer to the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program.