How Does Flood Insurance Work?

Flood insurance is a type of property insurance that is separate from your home insurance policy or commercial property policy. Damage due to floods are often excluded under basic property policies, which is why it is available to purchase through certain private insurers as add-ons or individual policies.

Flood insurance policies come from the NFIP (National Flood Insurance Program). You cannot purchase the insurance directly from this program, but need to go through an insurance provider. Not all insurance agencies provide flood insurance.

What You Need

As with any other insurance policy, you purchase flood insurance coverage through monthly or yearly premiums. In exchange, you may be compensated for damages due to a flood after filing a claim. When you file a claim with your flood insurance provider, an underwriter from the agency will investigate the claim to determine how much compensation you will receive.

What Does Flood Insurance Cover?

Flood insurance covers two main aspects: dwelling and personal belongings. Dwelling coverage covers the physical property, such as the home’s foundation, in case of damage due to natural flooding. Personal belongings coverage provides compensation for your personal items that are lost or damaged due to a flood.

Flood insurance covers natural floods and sudden and unexpected floods due to burst pipes. It may also cover mold in the home caused directly by a flood.

What Does Flood Insurance Not Cover?

Flood insurance has its limits when it comes to coverage. This insurance does not cover any damage that can be pinned to negligence. Water damage that occurs as a result of the homeowner failing to maintain safety regulations (such as failing to fix old or broken pipes) will not be covered under flood insurance. Most flood insurance policies also exclude damage to basements and the items within them, especially expensive items such as jewelry, art and furs.

Overall, flood damage that could have been predicted and prevented will not be covered.

How Much is Flood Insurance?

Flood insurance is relatively inexpensive, but prices depend on your location. Areas with a higher risk and history of floods will cost more to insure. On average, flood insurance costs around $58.33 a month.