If you don't live in a high-risk flood zone, an area with the greatest risk of flooding, you may not have considered buying flood insurance. However, purchasing a flood policy is prudent for many owners and renters.
Flooding can happen anywhere. Natural disasters are increasing each year. There's a chance for flood damage, even in areas considered low-risk. Typical renters' insurance and standard homeowners' insurance policies don't cover most types of flood damage.
Below, you'll find an in-depth explanation of the following:
- When a property must have flood insurance coverage
- What flood insurance covers
- Responsibilities of the insurance provider
Read on to learn more.
What Is Flooding?
According to the Federal Emergency Management Agency (FEMA), in simple terms, a flood is "an excess of water on land that is normally dry." Under the standard policy language, a flood is "a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from" the following:
- Overflow of inland or tidal waters
- Unusual and rapid accumulation or runoff of surface waters from any source
- Mudflow, which is a river of liquid and flowing mud on the surface of normally dry land areas
- Collapse or subsidence of land along a body of water as a result of erosion or undermining caused by waves
Typical flood insurance policies do not cover wind-driven rain and hail damage.
Am I Required To Have Flood Insurance?
Not everyone is required to have flood insurance. If you have a federally regulated mortgage and live in a high-risk flood area known as a Special Flood Hazard Area (SFHA), the Flood Disaster Protection Act of 1973 requires you to obtain it.
The federal government uses flood maps to designate areas at highest risk for flooding. Lenders and landlords may use flood maps, too. They can use the flood map data to insist that you purchase flood insurance as a prerequisite to your loan or lease.
Flood Insurance Requirements
Homeowners and business owners in high-risk flood areas with government-backed mortgages must have flood insurance.
You must maintain flood insurance if you live in a high-risk flood area and have received disaster assistance. Paying your flood insurance premiums and maintaining flood insurance will keep you eligible to apply for any future disaster aid.
Consider Purchasing Optional Flood Insurance
Federal law does not require flood insurance if you live outside of the high-risk area, but it can bring you peace of mind. Flood insurance can protect your home and savings. Exploring obtaining flood insurance, even when not required, is wise.
Policyholders are not usually covered for flooding damage with home insurance policies. These policies typically only cover water damage that originates inside your home.
Homeowners' policies will usually provide contents coverage for water damage from a burst pipe or a water heater. It won't cover you for flooding caused by:
- A river overflowing
- Many other types of flood damage
The National Flood Insurance Program
Congress created the National Flood Insurance Program (NFIP). The NFIP provides property owners affordable flood insurance and helps mitigate flood devastation. This federal flood insurance program works through local preventative measures. NFIP helps with floodplain management.
If a given community agrees to adopt and enforce ordinances to manage its flood risks, the federal government will agree to provide flood insurance. The NFIP policies cover members of that community who qualify for coverage. Under the Department of Homeland Security, the Federal Emergency Management Agency (FEMA) administers the NFIP. Floodsmart.gov, a FEMA website, provides a wealth of information regarding flood insurance.
What Does Flood Insurance Cover?
Even though it's called flood insurance, it doesn't necessarily cover all types of flood damage. The type of policy you choose determines how the insurance will cover the flood insurance claim.
You can select coverage for your actual property (i.e., the building), personal property (i.e., furniture and clothing), or both. The NFIP offers two types of coverage to protect your home and belongings — building coverage and contents coverage.
The typical property policy (building coverage) includes coverage up to $250,000 ($500,000 for commercial buildings) for the following:
- Your home and its foundation
- Electrical and plumbing systems
- HVAC equipment
- Kitchen appliances
- Permanently installed carpeting
- Other permanently installed fixtures
The standard personal property (contents coverage) policy includes the following coverage, up to $100,000 ($500,000 for commercial):
- Freezers and the food in them
- Valuables (subject to policy limits)
Flood insurance protects your assets and the things you value.
What Isn't Covered by Standard Flood Insurance Coverage?
It's also important to note things that are not usually included in a standard flood insurance policy, such as:
- Precious metals
- Valuable papers like stock certificates
- Property outside your home, including pools, hot tubs, fences, and decks
- Temporary accommodations while your home is under repair
- Financial losses caused by business interruption
Finding an Insurance Provider
NFIP partners with private insurance companies and NFIP Direct to sell and service flood insurance policies. An agent can provide you with a quote for flood insurance costs.
If your insurance agent does not sell flood insurance or you need assistance locating a flood insurance provider, use the NFIP insurance provider locator to help.
Responsibilities of the Insurance Company
Even if you obtain flood insurance through the NFIP, it's handled by private insurance companies. The insured pays premiums to the insurance company. In exchange, the insurance company agrees to pay for specified losses up to the policy limits of your plan.
After flood damage, you should contact your insurance company immediately and file a claim. The insurance agent will assign your claim to an adjuster. They will also assist you with the claims process and determine the value of damaged property and the cost of repairs.
If your insurance company refuses to cover your legitimate claim or otherwise fails to cooperate under the terms of your insurance policy, you have several options.
- You can try to sue the company in a breach of contract lawsuit or file a suit claiming they've acted in bad faith
- You can also contact your state's Department of Insurance, which enforces state law regarding the insurance industry
A local insurance attorney can help you determine the best option.
Protecting Your Rights After a Flood
The physical damage and emotional turmoil caused by a flood can be overwhelming. Flood insurance can prevent financial ruin and bring about a quick recovery.
Understanding what your policy covers and your rights and obligations can also be complex. If you're having issues with your flood insurance, don't fight that battle alone. To protect your interests and recuperate your losses after a flood, contact a local insurance attorney familiar with flood insurance laws and regulations.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.