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If you think your home insurance policy will protect you in the event of a flood, you may be in for a shock. Because standard homeowner’s policies do not cover floods, you'll probably need to seek additional coverage—especially if you live in a region prone t…
Who Needs It?
Homeowners and landlords with homes inside high-risk zones are required to own flood insurance. If you take out a mortgage on a property in a flood zone, you must have flood insurance for the life of the loan. If you own property outside of a flood zone, however, you aren't obligated to purchase flood insurance.
When you seek a loan for property that lies within a flood zone, you're required to furnish proof of flood insurance before the loan closes. Likewise, lenders are required by federal law to make sure mortgage holders with property within flood zones have flood insurance to cover against losses.
Where to Buy
The National Flood Insurance Program website lists more than 80 private insurance companies that offer flood insurance. Flood insurance can also be purchased through property insurance agents.
How Much Does It Cost?
Flood insurance premiums vary based on the type of coverage and your home's circumstances. Factors like your home's age, style, and location determine the likelihood that your home will be damaged in severe weather, which helps pinpoint the rate you'll pay. Rates are set nationally, so they don't differ between insurance companies, but it is possible to qualify for discounts.
The amount of coverage you buy will depend on the value of your home—and also what's inside. You can opt for a building policy, which covers the walls, roof, floors, and so on, or you can add on a contents policy, which covers household valuables. Neither policy, however, covers the land on which your home sits.
What’s Covered on a Building Policy
If your flood insurance policy offers building coverage, this will typically cover the structure and foundation, electrical and plumbing systems, cabinetry, HVAC systems, built-in appliances, and carpeting. Be sure to ask your insurance agent if debris removal is also covered.
What’s Covered on a Contents Policy
Contents policies give you coverage for most of what you own. This includes furniture, clothes, curtains, area rugs, electronics, small appliances, and certain valuables. Keep an updated inventory of your home’s contents to make it easier for you to file a claim in the event of an emergency.
Direct vs. Indirect Coverage
Physical damage caused directly by flooding, such as damaged furnishings and flooring, is usually covered by a policy. Indirect damage may also be covered if it was caused as a result of the flooding—for instance, mudslides, sewer backup, sinkholes, or even fire. Check with an agent to learn exactly what is covered by your policy—and what isn't!
What’s Not Covered
It's equally important to learn what your flood insurance will not cover; these items can be significant—and costly. Don't expect coverage for damage caused by overflowing sump pumps or by moisture, mildew, and mold. Most policies limit coverage in basements and crawl spaces, so make sure to have the insurance agent go over the details before you sign.