Flood Insurance 101

Flood: A general and temporary condition of partial or complete inundation of 2 or more acres of normally dry land area or of 2 or more properties (at least 1 of which is the policyholder’s property) from outside water or mudflow

Most home owners assume their standard homeowners policy will cover them in the event of a flood, but that is not the case. Flood coverage does require you to purchase a separate policy. Purchasing a flood insurance policy is an easy process and the policies are usually very affordable, depending on where your home is located and how much coverage you need.

Flood Facts

• 90% of natural disasters in the US involve some type of flooding (FEMA)
• 25% of all flood claims filed are in areas with a low to moderate flood risk (FEMA)
• Floods do not only occur in coastal areas or to waterfront homes/properties
• One inch of water causes over $10,000 in damages (III)
• Flash floods from rapid rainfall are common and can cause significant property damage
• Flood coverage for vehicles is optional and falls under the comprehensive/other than collision coverage on your auto policy
• There is a standard 30 day waiting period on new flood insurance policies through the NFIP (National Flood Insurance Program) from the date the premium is paid until coverage is effective.
• NFIP policy maximums are $250,000 for the home and $100,000 for personal property. Coverage beyond these limits needs to be written on a separate policy from private insurers.

Flood insurance is one of the most under purchased insurance policies in our country. According to a 2018 Insurance Information Institute survey, only 15% of homeowners in America had chosen to purchase a flood insurance policy. Choosing to not purchase flood insurance leaves you dependent on federal disaster assistance in the event of a flood loss. Less than 50% of flood incidents in America receive federal disaster assistance, because a community is first required to be designated as a federal disaster area before the government will make financial help available. Financial relief from floods without insurance typically comes in the form of a loan from the federal government. These loans are usually low-interest and are required to be paid back.