Understand Flood Insurance Coverage Options
Floods are among the most frequent and costly natural disasters in the United States, causing significant damage to homes and businesses annually. While many homeowners may assume that their standard homeowner’s insurance policy covers flood damage, this is often untrue. That’s where flood insurance comes into play.
What is Flood Insurance?
Flood insurance is coverage against property loss from flooding. To determine risk factors for specific properties, insurers often refer to topographical maps that denote lowlands, floodplains, and floodways that are susceptible to flooding.
More About Flood Insurance
Only 20% of American homes at risk for floods are actually covered by flood insurance nationwide. Most private insurers do not insure against floods due to the prevalence of adverse selection, which is the purchase of insurance by persons most affected by the specific peril of flood.
The National Flood Insurance Program defines flooding as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties (at least one of which is your property) from overflow of inland waters, unusual and rapid accumulation or runoff of surface waters from any source, and mud flows.
This can be caused by landslides, hurricanes, earthquakes, or other natural disasters that influence flooding, but while a homeowner may, for example, have earthquake coverage, that coverage may not cover floods caused by earthquakes.
Why do You Need Coverage?
Floods can occur anywhere, at any time, and can cause significant damage to your property. Unlike natural disasters, floods are not covered under most standard home insurance policies. If a flood damages your home, you may be left with expensive repair costs.
The increase in extreme weather events has made it even more important for homeowners to consider obtaining flood insurance.
Furthermore, if you live in a high-risk area, as determined by the National Flood Insurance Program, you may be required to have flood insurance. Without coverage, you may face fines or penalties for non-compliance.
How Does Flood Insurance Work?
Flood insurance works similarly to other types of insurance. You pay a premium; in return, the insurance company will cover certain losses and damages caused by a flood.
Flood insurance covers the costs of repairing or replacing damaged property and belongings, providing additional living expenses if you cannot live in your home due to flooding, and covering cleanup costs and mold remediation.
It’s important to note that flood insurance usually limits what is covered. For example, it may not cover damage to items in a basement or damage caused by sewer backups.
Connect with an our agency to understand the specific coverage options for your area and home.