Flood Insurance
What is flood insurance?
Your homeowners policy typically protects you and your belongings from covered perils ranging from fire to theft. Homeowners insurance does offer coverage for some water damage losses like pipes bursting or water backing up from sewers and drains (this is an optional coverage).
However, a main exclusion on your homeowners policy will be damages arising from flood. You will need to buy a separate flood policy to be covered from flood losses, such as heavy rainstorms with water pooling on the ground.
What’s does flood insurance cover?
Flood insurance provides coverage for:
Building - the foundation, the flooring, the structure, electrical and plumbing, heating and air units.
Contents - the furniture, electronics, clothing, and other items.
Flood insurance does not provide coverage for damage caused by moisture or mold (which applies for homeowners insurance in most cases as well). There are also limitations for the basement. Please view the full policy contract for more details.
Do I need flood insurance?
Floods can happen anywhere. If you’re in a low risk area, you could be eligible for a flood policy through the NFIP through a Preferred Risk Policy with premium as low as around $400. If you’re in a moderate to high risk area, your lender may require that you purchase flood insurance.
Other considerations
There’s some differences in flood insurance vs. other policies:
Waiting periods – if purchasing on your own (and not required by your lender), there is a 30-day waiting period for coverage to begin with the NFIP. Some private flood insurers have a shorter 10-day waiting period.
Cancellation refunds – typically, there is no cancellation refund if the policy is canceled midterm. If canceled midterm due to the property being sold, you may be eligible for a refund.
How do I get flood insurance?
There are 2 main markets for flood insurance:
National Flood Insurance Program (NFIP), a division of FEMA – these are normally sold by private insurance companies and administered by the federal government. Due to this, rates are locked in based on your flood zone and other details. Coverage limits tend to be lower with a max of $250,000 for the dwelling.
Private flood insurance – another option is the private flood market. You can tailor your policy to increase coverage beyond what the NFIP offers, and many times at a lower rate. There are also reduced waiting periods vs. NFIP.
