Does my homeowners insurance cover flooding?

Imagine a situation where you have a homeowners’ insurance policy that gives you adequate coverage for natural disasters and there is a flood in your area. You would call up your insurance agent who just informs you that your policy does not cover floods! So what are you left with? A homeowner’s insurance policy and a damaged house, and nowhere to make a claim. This is quite a common scenario that happens with many of us. And if there is anything that’s responsible for such a situation, then it is our ignorance. While many insurance policies (such as the HO-3 policy) provide coverage for natural disasters, they do not explicitly mention floods. Since we do not read between the lines, nor do the agents inform us beforehand our sufferings multiply.

 
Damages caused by flood are not covered by the standard homeowners’ and renters’ insurance policies. There are separate flood insurance policies that provide coverage for floods. Flood insurance policies are offered by the National Flood Insurance Program and also by few private insurance companies. It should be noted that only flood insurance will cover loss due to floods, and no other homeowners’ and renters’ insurance provide coverage for such loss. Both homeowners and renters can buy flood insurance policy. If you are a homeowner in a flood prone area or intend to buy a house in those areas, getting a flood insurance policy is of prime importance. If you are planning to rent a house in these areas, you too should consider buying a flood policy since you will be able to recover the loss of your personal possessions with the policy.

 
Even if you are not a resident of a flood designated area, yet you may meet unforeseen flood situations. Suppose you have judiciously built your home away from a flood prone area, still there can be floods caused by overflow of a nearby river, heavy rainfall or continuous melting of snow! Therefore, it is advisable to have flood insurance, especially because the other insurance policies won’t help you in these situations. Since, the policy requires a 30-day waiting period it’s better for you to apply as soon as possible. If you apply for flood insurance while there is an imminent danger of flood, you might not get the chance to insure your house and possessions before the flood causes havoc. While flood insurance covers water seepage too, the same must be caused by flood. Seepages resulting from any other factor do not come under this insurance since it is held as a maintenance issue.

Flood insurance policy covers all direct physical losses in addition to the losses ensuing from flood-related erosion. Coverage on mudslides is provided only if particularly mentioned in the policy. The policy also insures the basement structure and all the regular items and equipments housed in the basement, provided the damage is caused by flood, although damages to the stored personal possessions are homeowner’s liability. Both homeowners and renters can acquire flood insurance if their community participates in the National Flood Insurance Program. NFIP is a federal program intended to provide affordable flood insurance to renters, homeowners, and business owners. The insurance policy provides replacement cost coverage for the structures of your home and for personal belongings, there is actual cash value coverage. All the expenses incurred in rebuilding your home are paid from replacement cost coverage. However, for your possessions what you get is the replacement cost minus the depreciation, which means new houses will get greater coverage.

 
The Federal Flood Insurance program restricts itself to providing limited coverage. You can acquire additional coverage, known as “excess” flood insurance, which are offered by specialized insurance companies other than the National Flood Insurance Program. The excess flood insurance policy provides coverage even above the specified limit of the Federal program, depending on the amount of coverage purchased. Flood insurance policies are readily available in all parts of the country and are easily affordable. In U.S., since your house is more likely to get damaged by floods than fire, getting a flood insurance policy is considered as quite a necessary protective measure.