Flood Insurance

In terms of annual cost and households affected, flooding is by far the most common natural disaster in the United States. Because so many homes are affected each year it is also our most expensive natural disaster.

Whether it happens as part of a hurricane or flood, or in a neighborhood or locality affected by an extreme rain event or even troubles with a city’s waste water management, if you don’t have flood insurance you could be risking losing your home and your savings.

My home insurance doesn’t cover flooding, what can I do?

When you buy your home insurance, it might be reasonable to expect that flooding would be among the covered events. However, because of the annual toll of flooding, most home insurance does not include it in their standard coverage.

Instead you will have to buy an additional flood insurance policy.

It is possible that your home insurance company won’t even offer it and you will have to get this policy through the national flood insurance program. Because of the national cost of flooding, there is no need to actively “shop” for plans. The federal government establishes local rates based on the location of your home and will not allow insurers to deviate from that. There is no price competition because the maximum insurable values are already set.

Where are you will have some cost flexibility is in the value of the deductible. You can select the deductible value for the home itself and for the contents. You can lower your premiums by increasing your deductibles, though once again the federal government sets limits.

Also note that flood insurance can’t be purchased as a storm approaches. With a few notable exceptions, there is a 30 day waiting period between the time you sign up for the insurance and when it takes effect. This is obviously designed to prevent people from buying flood insurance as a major hurricane approaches.

When I get flood insurance, what does it cover?

This insurance will cover flooding from many causes, including heavy rain, snow melt, storm surges, dam failures and even hurricanes.

Typically this insurance will cover structural damage to your home. This includes the foundation and frame, electric and plumbing systems including water heaters, heating and cooling systems, and permanently installed paneling or shelves. The insurance will also cover up to 10% the garage, even if it is detached, carpeting and flooring, and removal of the debris from the flood site.

Your personal possessions will also be covered. This includes furniture, window treatments and window air conditioners. Your appliances will be covered, including food in the refrigerator or freezer. Additionally, your clothing, personal electronics, and valuables such as jewelry.

Flooding can be immensely destructive. In fact, it can leave you without a home or even without a foundation. For this reason, it is unlike any other sort of disaster that may befall your home.

This is why the federal government regulates flood insurance so closely.

If you want more details on flood insurance, check out the FEMA flood insurance guide.

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