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What you need to know about flood insurance

You’ll need to buy a separate flood insurance policy.

A red house sinking in a flood. Credit: Reviewed / Getty Images / dvoevnore

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Dealing with flood damage to your home can be a significant hassle and, in some cases, incur massive repair costs. If you want to protect your home and belongings should a flood strike in your area, you’ll need more than a homeowners policy.

A standard homeowners insurance policy does not cover damages from flood waters. To protect you in the case of such an event, you’ll need a separate flood insurance policy.

Here’s what you need to know about flood insurance.

What does flood insurance cover?

A suburban home sunk underwater in a flood.
Credit: Reviewed / Getty Images / BanksPhotos

The standard homeowners policy doesn’t cover flood insurance.

According to the National Flood Insurance Program (NFIP), a federal flood insurance program that was created following the National Flood Insurance Act of 1968, flood insurance can cover several items in your home based on two categories, the building or structure of your home and the contents or personal belongings in your home.

The building or structure coverage of your home would include:

  • Electrical and plumbing systems
  • Furnace and water heaters
  • Refrigerators, stoves, dishwashers
  • Carpeting
  • Cabinets and bookcases
  • Window blinds
  • Foundation walls and staircases
  • Detached garages
  • Fuel tanks and solar energy equipment

The contents or personal belongings coverage of your home would include:

  • Clothing, furniture, electronic equipment
  • Curtains
  • Washers and dryers
  • Portable and window air conditioners
  • Microwave ovens
  • Valuable items such as furs and original artwork

Where can you get flood insurance?

You can purchase flood insurance in the insurance market or from the NFIP.

“Flood insurance policies can be purchased through local insurance agents by homeowners, business owners, and renters who want protection for their homes, buildings, and belongings. Landlords can buy separate flood insurance policies to help protect their building,” says Loretta Worters, vice president of media relations for the Insurance Information Institute.

How soon does flood insurance take effect?

With NFIP, flood insurance policies come with a 30-day waiting period, but you won’t have to wait as long if you get flood insurance from other sources.

With private market flood insurance, your waiting period will be 10 to 14 days.

How much does flood insurance cost?

A flood insurance policy from the NFIP costs about $700 per year. But private insurance may cost more because it comes with higher limits and broader coverage and could cost more than $2,000.

According to FloodSmart.gov, the factors impacting the price you will pay for flood insurance include:

  • The risk of flood in your area
  • Coverage types such as coverage for your home’s structure and coverage for your belongings
  • The amount of coverage that you purchase
  • The deductible
  • Your home’s location
  • The age and design of your home

What are the coverage limits for flood insurance?

Coverage limits vary based on where you buy the coverage.

If you purchase flood insurance through the government’s National Flood Insurance Program, there are limits of $250,000 on the home and $100,000 on the contents. And for businesses, it’s $500,000 on the structure and $500,000 on the contents.

But you can buy insurance with higher limits in the private market.

“The private market has made coverage available probably over the past 10 years. It is much more comprehensive than the NFIP policies with higher limits available,” Worters says. “What differentiates private flood insurance policies is that it receives no backing from the federal government.”

When is flood insurance required?

Many suburban homes sunk underwater due to a flood.
Credit: Reviewed / Getty Images / oobqoo

To get coverage for flooding, you’ll need to buy a separate policy.

If you own a home or business in a high-risk area for flooding, you may be required to buy flood insurance. You can find out if your home is in a flood area using the FEMA Map Services Center.

“Property owners in high-risk flood areas are required to have flood insurance if they have a government-backed mortgage,” Worters says. “While flood insurance is not federally required if you live outside of the high-risk area, your lender may still require you to have insurance.”

How common is flooding?

Flooding is the most common and costly type of natural disaster. One inch of water in a home can cost more than $25,000 in damages. In high-risk areas, there is a one-in-four chance of flooding during a 30-year mortgage, according to a spokesperson from the Federal Emergency Management Agency.

Moderate and low-risk areas flood as well. One in three flood insurance claims come from moderate to low risk flood areas, according to FloodSmart.gov.

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