What does flood insurance cover and do I need flood insurance?


Before we delve into flood insurance, please note that a standard homeowners insurance policy will not cover a natural disaster such as flood - this has to be covered by a separate insurance policy.

Having said that, here are the losses that are covered by flood insurance:

  • Structural damage or losses. This includes damage to the walls, foundation as well as fixtures of the house. This will also cover the systems in the house - electrical, plumbing, central air-conditioning and heating systems. The flood insurance will also cover damage to fixtures such as cabinets, carpets, flooring and drywall. The flood insurance will also pay for removing debris on the structure.
  • Losses on personal property. The insurance will pay for the property that was damaged or lost during the flood, such as household appliances (that are not covered by a dwelling policy), furniture, clothes, electronic devices as well as food in the freezer. The flood insurance will also cover high-ticket items up to a certain limit.
  • Basement area. Some areas of the basement are covered, some are not. Improvements on the walls, ceilings and floors, as well as furniture and personal belonging are not covered. However, the structure itself is covered, as well as any essential equipment that are installed in its proper location and are connected to a power source.
  • What's not covered. The insurance will not pay for cars, other motor vehicles (such as an ATV or boat), as well as damage to swimming pools, trees and landscaping. The insurance will also not pay for lost money, gold and stock certificates.

There are different kinds of flood insurance for different types of structures - such as a home, a condominium or a building.

As for the question of whether you need flood insurance or not, that will depend on where you are living. In some cities and states, flood insurance is legally required of residents whose home is located in a flood zone. If you can't get it from your insurance company, then you can buy it through the National Flood Insurance Program, which sells the coverage to states that participate in their programs.

It will be helpful to consider getting flood insurance, even when you do not live in a flood-prone area. There may be unexpected circumstances which make your location susceptible to flooding. In fact, according to the NFIP, a quarter of all claims come from areas that are not considered flood-prone.

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