Flood insurance is a special type of coverage offered through the National Flood Insurance Program, which is a government program set up specifically to provide protection from flood damage to homeowners around the United States. Homeowner’s insurance will not typically cover flood or other disaster damage, which is why a separate flood policy is always a good addition to get the most protection for your home.
This coverage is a must for anyone living in a “flood zone” (as designated by the NFIP and/or FEMA regulations and mapping guidelines). However, even those who don’t live in high-risk areas can benefit from this coverage simply because you never know when and where disaster will strike. According to FEMA, over 20% of the flood claims it handles come from lower risk areas.
A flood policy will offer coverage for both the property and the personal contents in the property in question. Generally, the physical building and all of its systems, attached furnishings, and even a detached garage can be covered under the property section of this policy. Personal effects, including furniture, clothing, electronics, and even appliances are protected under separate coverage. The maximum limit for property damage is $250,000. The maximum limit for personal contents is $100,000.
Additionally, property damage is reimbursed on a replacement cost basis (what it would cost to complete repairs today) while personal effects are paid at actual cash value minus depreciation. There are some things a flood policy from the NFIP will not cover: preventable moisture/mold damage, currency and paper or precious metals valuables, outdoor property (decks, fences, pools, etc.), living expenses for temporary relocation, and cars or other vehicles damaged in flooding. Basements and crawl spaces are often not covered with this insurance.
The benefits of this insurance are easy to see. First of all, home insurance will not cover flood damage. Therefore, having this insurance gives you protection you won’t get elsewhere. Secondly, it allows you to have a backup policy to provide additional reimbursement when your home is damaged in a flood or flood-related disaster. You will have more money to repair and restore your home to its original state.