Whether you live near a lake, river, or far from any water, you may need flood insurance to protect your home. Flood insurance is the only insurance product that will cover you if your home is damaged or destroyed by a flood.
Why Can’t You Use Your Home Insurance for Flooding?
Home insurance just doesn’t cover flooding. Floods have a very different set of risks and costs than most other disasters that could affect your home. Therefore, insurance companies sell flood coverage as a separate product from home insurance.
Who Needs Flood Insurance?
Most homeowners need home insurance. Remember, your home insurance will almost never cover flooding. If you’re along a riverbank, lakeshore, or other high-risk flood plains, your need is obvious. However, any area can have a problem with excessive rain or snow runoff, blocked drainage, or broken water mains.
If you are a renter, your landlord is responsible for insuring the structure of your home if they don’t want to lose it in a flood. Their insurance won’t protect your personal belongings, though. Like home insurance, renter’s insurance won’t cover flood losses. Instead, you’d need to get flood insurance with personal property coverage only.
Do You Have to Buy Flood Insurance?
Flood insurance is usually more of a smart idea than a legal requirement. If you own your home outright, you’re free to accept the risk of having to pay to repair or rebuild it out of your pocket. If you have a mortgage, your lender will almost always require you to have flood insurance. Also, if you’ve ever received federal assistance for a flood or other disaster, you may be ineligible for future aid unless you maintain flood insurance.
What is a Flood?
A flood for flood insurance purposes, as defined by the federal government, is an excess of water on land that is usually dry that affects either two or more acres of land or two or more properties. This is important because that’s what flood insurance covers and home or renter’s insurance exclude.
More narrow “flooding,” such as a sewer backup or pipe breaking in your own home, would typically fall under home or renter’s insurance. However, you’d need to make sure you have the right coverage options. This type of water damage is often a separate portion of those policies with a separate limit or deductible.
What Does Flood Insurance Cover?
Like other types of insurance, flood insurance is broken up into multiple types of coverages.
Building coverage protects the structure of your home itself. Depending on the extent of the damage, this could be to repair it or to replace it. Building coverage includes the major structural components like electrical wiring, plumbing, foundation, and flooring. It also includes major, permanently installed appliances like furnaces, air conditioners, water heaters, refrigerators, stoves, and dishwashers. Many policies will cover you for the current cash value of your items, but you may have the option to purchase coverage for the new replacement coverage. Included items, limits, and exclusions may vary by the insurance provider.
Contents coverage protects your personal belongings that aren’t included in building coverage. This can include things like smaller appliances, rugs, and curtains. It also includes your clothes, furniture, and electronics. Note that certain high-value items, like electronics, artwork, and collectibles, may have smaller per-item limits even if the total value of belongings is under your chosen contents coverage limit. You can buy additional coverage for these items separately if needed.
Some items fall outside of building or contents coverage. For these items, you’d either need to add special coverages or wouldn’t be covered. One of the most important is additional living expenses such as temporary housing while your home is repaired or you find a new one. Outdoor property, including permanent items such as decks, fences, and pool equipment, may also not be covered by the standard options. Also, you should be aware that the standard coverage for items in basements is minimal — it often includes things like furnaces but not items you have stored in your basement or any finished spaces.
What is the National Flood Insurance Program?
The National Flood Insurance Program provides federal backing for many flood insurance policies. This helps to spread out the risk and helps make sure the insurance companies can pay out all claims even after significant flooding. If you are in a high-risk flood zone, NFIP policies will often be the most cost-effective. However, you can buy any policy that’s available for your area.
How Much Does Flood Insurance Cost?
The two major factors in your flood insurance premiums are how much coverage you need and where you are. If you have a more expensive home or more physical assets inside of your home, you’ll need higher limits that cost more. Homes in the highest-risk flood zones see the highest premiums, while those with the lowest risk can see much lower premiums. That’s why it usually makes sense to get flood insurance no matter where your home is located because your costs are proportionate to your risk.
Request a Quote
Your independent insurance agent can help you find the right flood insurance coverage at the best price. Sagen & Associates Insurance has locations in Shawano and Brodhead, WI. If you’re in the area, contact us now to learn more or to start your quote.