All About: Flood Insurance For Your Home
Flood insurance pays cash when water from outside of your home gets inside your home, then causes damage. Flood damage is not covered by a standard homeowners insurance policy or renters insurance policy. For protection from flood waters in your home, flood insurance is necessary.
What is Flood Insurance?
Flood insurance is an insurance policy which pays cash when water enters a home from the outside, and damages a property on the inside.
Flood insurance is available to homeowners and renters. It pays for:
- Repairs to the inside of a home that’s been damaged by flood waters
- Replacements for personal property inside a home that’s been damaged by flood waters
Insurance companies are specific about “what qualifies as a flood.”
In insurance terms, a flood is when two or more homes are damaged by water; where the water has come from an overflowing natural body of water, from mud flow, or from a heavy rain that overwhelmed the ground’s ability to handle natural water run-off.
All 50 states have experienced floods in recent years.
Flood insurance is required to file an insurance claim for damages after a flood. This is because damage from flooding is specifically excluded from homeowners insurance and renters insurance policies. Separate flood insurance coverage is required.
Floods cause more damage in the United States than any other weather-related event. With proper coverage, though, you can be protected.
As an example of how flood insurance can work, let’s say flood waters reach your street and your car is parked nearby. Water sweeps up your car and carries it into the side of your home, where it knocks loose your siding and puts cracks in your foundation.
Repairs to your car will be covered by your auto insurance’s comprehensive coverage clause. Repairs to your home will be paid by your flood insurance.
Flood insurance pays for other things, too.
It pays to fix electrical and plumbing systems in your home; to replace appliances and heating and cooling systems; to replace carpeting and hardwood flooring; and, to haul debris. It also pays for damages to wardrobes, furniture, and electronics.
Flood insurance is optional and deserves your consideration because there’s an equal chance that you’ll experience a flood in the next 12 months as you will get into a car accident and be injured.
The majority of the United States is at risk for flood waters. And, in many areas, flood insurance is cheap.
It can be even cheaper when you bundle flood insurance with your other insurance coverages, such as homeowners, condo or automobile insurance. Bundling two or more policies from a single insurer can earn you multi-line discounts.
What Does Flood Insurance Cover?
Flood insurance pays cash when flood waters cause damage to the structure of a home, or the inside of a home and its contents.
Items covered by flood insurance are grouped into several main categories.
The first category of items protected by flood insurance is your home’s exterior, which is defined as your home’s walls and foundation; plus, any detached garages.
When flood waters damage your home’s exterior or its foundation, flood insurance pays cash to make the repairs. It also pays to remove debris.
The second category of items covered by flood insurance are the systems required to make your house run. This includes electrical and plumbing systems, central air and heating, and water heaters.
Sometimes, these systems can be fixed by a plumbing specialist or HVAC repair person. Other times, they require complete replacement.
Flood insurance pays out in both situations.
The third category flood insurance covers is kitchen appliances.
When flood waters enter your home and cause damage to your refrigerator, freezer, dishwasher, or other cooking appliances including ovens, stoves, and microwaves, flood insurance pays cash to repair or replace damaged appliances with new, working models.
Washers and dryers are included in this benefit as well.
Fourth, flood insurance covers flooring and the permanent woodwork of your home. This benefit extends to hardwood floors and carpets, as well as whatever paneling, bookcases, window treatments, and cabinets you have installed.
Lastly, flood insurance replaces personal property in your home that’s been damaged by flood waters such as furniture, clothing, and electronics; plus original artwork.
Homeowners insurance and renters insurance won’t cover damage caused by flood waters.
3 Questions to Help You Shop for Flood Insurance
Each flood insurance policy is unique. Pricing is based on the size of your home and its location; and, how much damage against which you want to protect.
In cities unlikely to flood, flood insurance can average below two hundred dollars per year for homeowners; and, $50 or less per year for renters. In higher-risk areas, insurance costs more.
It’s smart to shop around when you’re looking for flood insurance. You might find the cheapest flood insurance with small insurance companies that specialize in protecting against floods.
Here are three questions to help you get the most affordable flood insurance you can.
1. If a flood strikes your home, how much damage could you repair using your personal bank account?
When floods hit, they can be costly. One inch of flood water is capable of causing $20,000 of damage in a typical-sized home.
Someone making an insurance claim after a flood, though, doesn’t get all the money that’s requested from the insurer. Instead, they receive the money requested, minus the size of their deductible.
A deductible is the cash amount an insurance company won’t pay when responding to an insurance claim. Deductibles become the insured person’s out-of-pocket expense when something goes wrong.
When you sign up for flood insurance, you can choose the size of your deductible. $500 is the smallest-sized deductible available, and deductibles can range up to five thousand dollars.
The larger your flood insurance deductible, the less you’ll pay for flood insurance.
If you have at least $5,000 in your emergency fund, consider taking a large deductible on your flood insurance coverage.
Otherwise, opt for a smaller deductible. You’ll pay more for flood insurance when your deductible is low, but you’ll still get cash when flood waters affect your life.
2. Would you risk NOT having flood insurance?
All 50 states have experienced floods in recent years and homes in low-risk areas are still 25 times more likely to be flooded than to have a residential fire.
However, flood insurance is optional for many people. Not everyone needs to buy it.
Choosing to not buy flood insurance is a risk. When a flood hits, the damage can be huge. Walls can collapse, foundations can crack, and homes can become unsafe for living. Appliances can break and personal possessions can be ruined.
None of this damage is covered by homeowners insurance or renters insurance. The cost of repairs will have to come from your bank account. And, meanwhile, while you pay for your repairs, you’re responsible for paying your mortgage payment, too.
A flood can bankrupt you. Even though it’s not always required, getting flood insurance can be smart, defensive move.
3. Would you move all of your insurance policies to one company in order to get a big discount?
When you’re shopping for flood insurance, you might be able to get discounts on your other insurance coverages, too.
This is because insurance companies reduce rates for their customers who have two or more active insurance policies. It’s a pricing policy known as bundling.
When you bundle insurance, you can use your existing homeowners insurance policy or renters insurance policy to earn a discount on your flood insurance. Your discount could be even larger if your auto insurance was with the same company, too.
Bundling insurance can get you discounts of 25 percent or more, but you’ll want to check with multiple insurance companies in order to find your cheapest deal. Different companies offer different-sized discounts for bundling.
Shopping for Flood Insurance
Shopping for flood insurance is quick and simple. Talk to an insurance agent by phone, or shop and compare rates online anytime.
Flood insurance rates vary by company. Check with at least three insurance companies to make sure you’re getting a good price — especially if you plan to bundle your auto insurance, or homeowners or renters insurance with your flood insurance policy.