In the aftermath of a hurricane, some homeowners and renters will unfortunately discover that their standard homeowner’s insurance does not cover flood damage.
Flood insurance is usually never part of a regular homeowner’s insurance policy, which typically covers property damage from fires or other types of storm damage, such as fallen trees. Flood insurance is sold separately through the federal government’s National Flood Insurance Program.
Flood insurance covers damages for up to $250,000 per home or building and up to $100,000 if you purchase an additional insurance policy that covers your personal possessions. Contents coverage is often a policy purchased separately from your flood coverage policy.
People living in areas prone to seasonal flooding or storm surges may not be aware that they need to purchase a separate flood coverage policy until it’s too late. Flood insurance policies aren’t effective until 30 days after they were purchased, so buying a policy shortly before the hurricane season may not mean your home and belongings are covered.
Flood insurance premiums average less than $600 a year, but the cost can be higher in area at high risk for flooding. Flood insurance can be as low as $130 a year, including contents coverage. They can be purchased from most local insurance agents, and are administered by insurance companies, but the Federal Emergency Management Agency pays the claims.
It’s important to note that, unlike most homeowner’s insurance, flood insurance doesn’t reimburse you if you must seek temporary shelter, like a hotel or an apartment, because of flooding. They also don’t reimburse you for damage in your basement, except for damage to your heating, ventilation, air-conditioning and water systems.
Flood insurance doesn’t pay any replacement costs for your damaged possessions, paying only for the cash value of the damaged items.
The most common damages covered under flood insurance include:
- Foundation and structural damage
- Flood clean-up
- Sump pumps
- Water tanks and pumps
- Oil and natural gas tanks, including the oil and gas inside
- Furnaces, air conditioners, hot water heaters and heat pumps
- Electrical boxes, circuit breakers and any other necessary utility connections
- Stairways and elevators
- Unpainted drywall and ceilings
There are three types of flood insurance policies: Dwelling, for private homes and private condominium units; General Property, for apartments and other types of residential buildings; and Residential Condominium
Building Association policy for residential condominium buildings. Renters may also purchase a flood insurance policy.
Similar to most other types of insurance, you will likely have to pay a deductible if you file a claim for payment on your flood insurance policy. If you choose a higher deductible, it will lower the premium you’ll pay, but
it also won’t pay as much if you file a claim.
If you live in a high-risk flood area, you will likely be required to purchase flood insurance. Even if you are not required to purchase flood insurance from your mortgage lender, it may be highly recommended. You will need to pay your annual premium in full.
