If you’re asking yourself, “Will my insurance cover flood?” you may need some help. Flood coverage for homeowners can be confusing. Wondering “Will my insurance cover flood,” is not something most people want to have to ask themselves. Understanding flood coverage is key to makings sure you are protected from a flood.
The best way to answer the question, “Will my insurance cover flood?” is to look at some commonly held myths about flood insurance. Flood insurance is a confusing, but essential coverage for homeowners. So, let’s answer the most common concerns when you are wondering, “Will my insurance cover flood?”
There are differences between a flood caused by rising water and a flood caused by a burst pipe. If you have flood damage because a pipe burst while you were at work and flooded your kitchen, your home insurance coverage will most likely pay to repair the damage. It may not pay to fix the pipe though depending on what caused it to break. So, if you are asking yourself, “Will my insurance cover flood caused by a plumbing accident?” the answer is yes in most cases.
The National Flood Insurance Program (NFIP) defines a flood as:
The 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 mudflows.
Now, it becomes clearer why your home policy will cover water damage from a burst pipe in your kitchen but won’t cover flood damage as defined above.
In most cases, typical home insurance policies don’t include coverage for flood. That is why it’s important to make sure you have the correct flood coverage in place. Most flood policies are purchased through the NFIP and are separate from your home insurance policy. However, there are a few private insurance carriers that may issue flood policies.
You don’t have to live in a floodplain to have flood insurance. So, if you’re wondering, “Will my insurance cover flood if I’m not in floodplain?” the answer doesn’t have to do with whether you live in a floodplain, it depends on your policy. As discussed, most home insurance policies don’t provide coverage for flood.
Still, whether you live in a flood plain or not, flood insurance is a good idea, especially if you reside in a coastal state or near waterways. About 25 percent of flood claims come from homeowners who don’t live in a flood plain. Homeowners must weigh their risks depending on where they live.
If you live in a high-risk area for flood and have a mortgage on your home, your lender may require that you purchase flood policy. The average cost of a flood policy is about $700 annually. However, depending on how high your flood risk is and the size of your home, you may pay much more for flood insurance. So, if you are home shopping in high flood risk areas such as near lakes, rivers or coastline, factor in the cost of flood insurance.
The NFIP has a 30 day waiting period for new flood policies. So, if you submit a payment and application for flood coverage on January 1, the effective date of your policy is January 31. The policy doesn’t extend flood coverage for the waiting period. The waiting period is intended to keep consumers from rushing to buy flood insurance when there is a known flood event underway.
However, if you are purchasing a home, the waiting period is waived so you can secure flood coverage for your closing.
Flood coverage works differently if you are renting a home. Renters’ insurance does include coverage for flood. If you have an active renters’ policy, you will have flood coverage to protect your personal belongings. So, if you live in a rented home or apartment and a flood – as defined by the NFIP – strikes and damages your furniture, clothing, books and other belongings, your renters’ policy has coverage for you. But, if you’re renting with no insurance at all? You may be out of luck.
Policies that are issued through the NFIP are subject to maximum limits for your home and belongings. An NFIP policy offers at the most:
The above limits are the most flood coverage you can get from the NFIP. So, if the replacement cost on your home is $275,000 and you have a flood claim that is a total loss, you end up $25,000 short. For property values above the NFIP maximum, homeowners can purchase what is known as excess flood insurance. Excess flood insurance kicks in after your NFIP policy limits are exhausted. For homeowners with high-value residences, excess flood insurance is necessary to insure the home properly.
Asking yourself, “Will my insurance cover flood if my flood risk changes?” is a great question. Flood risk does change over time. When you purchased your house 20 years ago, you may not have been in a flood plain, but today you may be.
It is a good idea to check on your flood risk periodically. You can speak to an insurance agent who is knowledgeable about flood risk or view the NFIP flood maps at FloodSmart.gov.
Now you see why asking yourself, “Will my insurance cover flood,” is a good question, but the answer isn’t always straightforward. Most home insurance policies don’t cover flood risk. Talk to an insurance professional about your flood risk to make sure you have the proper protection in place.
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