What Does Flood Insurance Actually Cover?
Flood insurance is property insurance which offers coverage in case of losses sustained by water damage caused by flooding. However, sewer backup is covered by a separate coverage rider if the backup was caused by something other than the rising floodwaters.
Important things you should know about flood insurance:
Flood insurance can be availed for any property. However, if a property is located in a designated flood zone then you must have flood insurance to apply for a federally backed mortgage.
The policy rates for this particular type of insurance are determined by the National Flood Insurance Program based on different factors. The determined price hardly varies across providers with a uniform deal for all.
The flood zones are mapped by the Federal Emergency Management Agency. They assess risk and intensity of floods in different zones across the country.
The price of the policy depends on the location of the property which determines the zone. However, even the age, condition and number of floods the area is prone to are also taken into consideration.
What does flood insurance cover?
It is important to be clear about three things to understand what is covered under flood insurance.
Is flood insurance included in homeowners insurance? The answer is no. Flood damage is not covered by standard homeowners insurance at all. It usually covers some damage from rain but not floods caused by rising bodies of rivers, lakes or streams.
The federally regulated National Flood Insurance Program is the program that flood insurance is generally purchased from.
There are situations where it may be mandatory for you to buy flood insurance. For example, people getting a mortgage on a property located in a Special Hazard Flood Area will require you to have flood insurance.
When it comes to the flood insurance, the NFIP's policy of building property covers the actual value of the house or the cost to rebuild it, whichever is lesser. The clause includes:
The house along with its foundation.
Plumbing and electrical systems.
HVAC equipment like water heaters, furnaces and air conditioning.
Kitchen appliances including stove, refrigerators and built-ins like dishwasher.
Window blinds.
Water heater.
Permanently installed bookcases, paneling, cabinets and wallboard.
Detached garages (with a limitation of 10% of the home policy)
Debris removal.
The personal property that is covered under the NFIP policy includes:
Electronic equipment, furniture and clothing.
Curtains.
Dishwashers and portable microwave.
Window AC units.
Washer or dryers.
Carpets that the building policy does not cover.
Frozen food and freezer.
Up to $2500 for valuables like furs and art pieces.
However, one should note that only actual cash value is paid for personal possession claims and not the amount you actually paid for them. When purchasing the policy, opt for best flood insurance companies that clearly delineate the provisions.
The best flood insurance companies offer flood insurance policy for all people and requirements. Typically these policies do not cover items like stock certificates, cash, bearer bonds, precious metals, plants, trees, wells, patios, fences, swimming pools, decks, septic systems, walkways, hot tubs, retaining walls, boat houses, storm shelters, loss of income, sewer backups, cars, post-flood mold damage and other living expenses like temporary housing.