Flooding is involved in 90% of all natural disasters. As the most common natural disaster in the United States, damage exceeded $20 billion in 2021, according to the National Centers for Environmental Information.
As weather patterns continue to change, it’s best to be prepared. According to the Federal Emergency Management Agency, 99% of American counties have been affected by flooding in the last 25 years, and more than 40% of federal flood insurance claims between 2014 and 2018 were filed outside the areas of high risk of flooding.
Reading: How much does flood insurance cover
Most standard homeowners insurance policies do not include flood coverage. But if you’re in an area prone to hurricanes or floods, you can protect your finances with a flood insurance policy.
Since policies typically take 30 days to kick in, now might be the best time to get coverage for a low rate. Read on to learn everything you need to know about flood insurance, including what it covers and how much it costs.
read more: flood prevention checklist: protect your home from water damage
what is flood insurance?
Flooding can be the result of heavy rains, snowmelt and hurricanes, but it can also come from failed dams and blocked storm drains. Flood insurance supplements your basic home insurance policy, which typically doesn’t cover flooding, with coverage for your home’s structure and contents if they’re damaged by flooding.
Although most homeowners obtain flood insurance through the national flood insurance program, private flood insurance policies are becoming more popular options because they offer broader coverage at generally lower prices. The price disparity has become more pronounced since the NFIP enacted its new rating model, which included significant rate increases for 77% of policyholders nationwide.
Every home in the country is assigned a flood zone, divided into low, moderate and high risk areas. You can find out your level of risk on FEMA’s flood zone map (high risk zones are designated by the letters a or v). If you own a home in a high-risk area with a government-backed mortgage loan (FHA, USDA, or VA), your lender will require you to obtain homeowners and flood insurance. however, flood insurance is optional for homeowners and renters in low- and moderate-risk areas, or homeowners in high-risk areas with conventional mortgages.
how flood insurance works
Flood insurance works similarly to other insurance policies. pay a monthly or annual premium; If a flood occurs and your property is damaged, you receive a payment up to your policy limits to repair the damage (depending on the specific terms of your policy).
nfip coverage is an annual policy that is automatically renewed each year. the limits are currently capped at $250,000 for the structure and $100,000 for “contents coverage,” which applies to what’s inside your home. private flood insurance can offer different policy lengths and higher limits: up to $500,000 for the structure and $250,000 for the contents. higher deductibles come with lower premiums, but may require a higher out-of-pocket cost if you file a claim.
There is generally a 30-day waiting period from the time you purchase a flood policy until it goes into effect. This waiting period can be waived if:
- You are purchasing flood insurance when you modify your home loan.
- You purchase flood insurance after a wildfire has caused flooding on burned federal land, and the policy is purchased 60 days or less from the date the wildfire is contained.
- Your home has recently been mapped in a high-risk flood zone and you purchase insurance within 13 months of the map update. in this case, there is only a one-day waiting period.
- appliances, including your dishwasher, refrigerator, stove, oven, water heater, and heat pump
- Permanently installed items such as cabinets, paneling, shelving, rugs, stairs, anchor systems, and foundation walls
- detached garages
- electrical and plumbing systems
- solar power systems
- fuel tanks
- portable air conditioners
- non-permanently installed carpeting, such as rugs and rugs
- personal items, such as furniture, clothing, electronics, kitchen utensils, etc.
- up to $2,500 worth of valuables like jewelry, fine art, and furs
- Most furniture and items are stored in basements or underground rooms
- valuable paper, including cash, currency, stock and bond certificates, and precious metals
- property outside the home, such as a deck, patio, fence, pool, hot tub, gardens, or septic system
- damage due to mold, fungus or humidity
- additional living expenses and temporary housing while the house is unlivable during the repair
Private flood insurance typically has a 14-day waiting period and offers broader coverage options than NFIP insurance.
what flood insurance covers
what flood insurance covers is the same, whether you buy privately or through the nfip. Structure coverage typically includes:
If your entire home needs to be replaced or rebuilt, you’ll need to follow the 80% rule: the property must be your primary residence for 80% of the year, and you’ll need a policy that covers at least 80% of your home’s value .
content coverage, which covers what’s inside your structure, typically includes:
Contents coverage is valued at actual cash value, which is paid based on the depreciated cost of damaged property.
Items not typically covered by flood insurance include:
Limited coverage is provided for basements and underground living spaces. in these areas, built-in appliances and drywall damage are covered, but most personal items, window treatments, paneling, shelving, and floor coverings are generally not covered. When a flood risk is imminent, the NFIP recommends moving items from underground areas to higher floors to prevent or limit damage.
Private flood insurance may include expanded coverage plans with higher limits for home and contents coverage, pool repair, coverage for lost business expenses, and additional living expenses.
the cost of flood insurance
the average cost of flood insurance through the nfip in a year was $700 per $250,000 in home coverage in 2019. homeowners and renters in low- and moderate-risk flood zones can purchase preferred risk policies, which They offer the same coverage as standard policies and start at $100 a year. with the new nfip fair pricing model effective october 1, 2021, most us policyholders have seen an increase in rates, with 66% of nfip policyholders paying up to $10 more each month, 7% paying between $10 and $20 more per month and 4% paying $20 or more per month.
If your home is flooded and you are not insured, you may not receive government assistance. Federal disaster assistance is available only when the president makes a formal federal disaster declaration, and this aid is generally limited to a $5,000 loan that he will be required to repay.
Do I need flood insurance?
If you live in a high-risk flood area, you may need to get flood insurance. if not, flood insurance is optional. homeowners may choose to purchase dwelling and contents coverage; renters are eligible for contents-only flood insurance only.