What is Flood Insurance and Do I Need It?

While homeowner’s insurance is a required part of owning a home (if you carry a mortgage on it, that is), flood insurance usually isn’t. Flood insurance is a separate insurance policy from your typical homeowner’s insurance policy that covers your home and belongings should they be damaged in a flood. Traditional homeowner’s insurance policies do not cover damage caused by flooding. 

Who Needs Flood Insurance?

In some cases, your lender may require you to purchase a flood insurance policy. If your home is in a high-risk flood area, it’s likely you’ll have to buy flood insurance. 

Having said that, flood insurance isn’t just for homes located in high-risk areas. According to FEMA, every state is susceptible to flooding, and more than 20 percent of the flood claims they process come from people living in moderate to low-risk regions. 

Flood Insurance at a Glance

Anyone can purchase flood insurance. Homeowners, business owners, and landlords alike can purchase a flood insurance policy to protect their property and their belongings.

What It Covers

A building protection policy covers the structure itself, it’s major systems (electric, plumbing, etc.), any attached structures inside (bookcases, etc.), and a detached garage. Any other detached buildings need their own policy.

The policy pays out based on what it costs today to replace or repair the damage on a primary residence. For vacation homes, it pays out actual cash value, which takes into account depreciation. 

A personal property flood insurance policy covers things like clothing, curtains, freezers and the food inside, portable appliances, and some valuables like art. 

This kind of policy pays out at actual cash value minus depreciation. 

What It Doesn’t Cover

Just because something is damaged by water or moisture doesn’t mean it’s covered by flood insurance. Here are a few examples. 

  • Any mold or mildew that could have been prevented by the homeowner. 
  • Any currency, paper valuables, and precious metals
  • Outdoor property – patios, decks, pools, septics, etc. 
  • Temporary housing should flooding make your home unlivable
  • Cars and other vehicles

How to Buy Flood Insurance

You can purchase a flood insurance policy by contacting your insurance company. It’s important to note here that most flood insurance policies won’t take effect for 30 days after purchase. Exceptions to this do exist. For example, if you purchase a flood insurance policy at the same time you take out a mortgage, the policy may go into effect immediately. 

If your mortgage lender doesn’t require you to have flood insurance, it’s smart to still consider it as flooding can still occur in low-risk areas. Flood insurance policies are relatively inexpensive compared to the devastation flooding itself leaves behind. Contact your insurance agent for more details on obtaining flood insurance for your property.