Sarasota Insurance Agency >> blog
To understand what flood insurance covers, you need to know three things first:
1. Standard homeowners insurance doesn’t cover flood damage at all. It’ll cover some damage from rain, but if your home is filled with water as a result of rising bodies of lakes, rivers, streams, and oceans, it won’t cover you.
2. Flood insurance is mostly purchased from the National Flood Insurance Program (NFIP). It's a federally regulated program with two policies:
You can buy one or both.
3. You might have to buy it. If you’re taking out a mortgage on a property that’s in a high-risk zone (also called a Special Hazard Flood Area), your lender will require you to buy a policy in order to get the loan. If you just want to buy a policy, you have to make sure your community participates in the national flood program. Flooding affects every state, so you’re probably eligible.
NFIP’s building property policy covers the cost to rebuild or the actual value of your home (whichever is less). That includes:
The NFIP policy that covers your personal property will cover stuff like:
Note: Personal possessions claims are paid based on actual cash value — not what you paid for them.
Typically, if it belongs in a bank or safe deposit box, it’s not covered:
Other items not covered:
If you have a basement, you’ll have more risk because the NFIP limits coverage for basements, crawlspaces, or any living space where the floor is below ground level. Even a walkout basement won’t be covered for:
If you make four or more flood claims for more than $5,000 each, or two claims that, added together, cost more than your home, NFIP will “offer” you a grant to make your home less vulnerable to floods. If you refuse to take the grant money and make the improvements, your policy payments will probably increase substantially.
NFIP may give you $30,000 to use to raise, tear down, or move your home. That $30,000 gets added on to any other claim NFIP pays you. But the total still can’t go above $250,000.
The average cost is about $700 for a one-year premium; your insurance company, which issues the policy, can give you a quote. Ultimately, the amount depends on such factors as the amount of coverage, deductible, the risk level of your flood zone, and the age of the building.
As mentioned earlier, regular homeowners insurance doesn’t cover floods. So when is damage considered to be caused by a flood?
Also, the water has to come from:
You’re also covered when shorefront land collapses or sinks due to waters above “anticipated cyclical levels.”
Water and seepage that comes from sewer or drain backups, or a sump pump that overflows is not considered a flood.
Written by Dona Dezube