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Flood Insurance & Water Damage Policies, Are You Covered?

flood insurance policies and what they cover

Flood insurance is a type of property insurance that covers the damage caused by flooding that is the result of environmental conditions like hurricanes, storms, tidal waters, and mudslides.  And according to FEMA, one inch of flood water can cause up to $25,000 worth of damage to your home!  

While standard homeowners insurance policies likely include hazard insurance, this may only cover certain types of water damage, and flood damage is likely not one of them.  While water damage and flood damage are often used interchangeably, they are very different:

  • Water damage happens before the water comes in contact with the ground and is usually sudden and accidental like a toilet backup and your homeowners insurance covers this damage.
  • Flood damage is usually caused by water from a natural disaster, hurricane, heavy rain, or flash flood and flood insurance covers this damage.

If your claim is from a different type of water damage than what your policy states, your claim may not be covered.  And if your a homeowner but don’t have flood insurance, you will not be compensated by your insurance company for flood damage either.

Here’s some common examples of when a flood insurance policy or a water damage policy will come in handy.

Homeowners Insurance Should Cover Flood Insurance Should Cover
Washing machine overflows and floods your basement X
Damages from a leaking water heater  X
Frozen pipes burst and flood your home (as long as you are living there) X
Flood caused by an overflowing tub X
Water from outdoors floods into your home X
Your roof is damaged during a thunderstorm storm and water is leaking inside and is damaging ceilings X
Back-up from a toilet that has destroyed the floorboards X
Flash flooding that has damaged your home X
Foundation cracks caused by an overflowing river X
Hail has broken windows and is allowing water inside X
Storm surge that damages your house X

If you find out you don’t have a policy or that you need more coverage, don’t worry.  You can purchase flood insurance from the National Flood Insurance Program (NFIP) or from private insurance companies, and each has its own advantages and disadvantages.

National Flood Insurance Program (NFIP) 

For those living in qualifying areas, the National Flood Insurance Program (NFIP) is available for homeowners and business owners to cover their physical losses due to flooding.  A NFIP flood insurance policy covers two types of property: your home’s structure and your belongings.  Each type has its own deductible and limit, and homeowners can purchase one coverage or both. 

NFIP building coverage covers:

  • Plumbing, electrical and furnace systems
  • Sump pumps, water pumps and water heaters
  • Refrigerators, dishwashers and stoves
  • Permanently installed carpeting
  • Built-in bookcases, paneling, wallboard and cabinets
  • Foundation walls and staircases
  • Window blinds
  • Detached garages
  • Fuel tanks, well water tanks and pumps, and solar energy equipment

NFIP contents coverage covers:

  • Personal belongings, furniture, clothing, and electronics
  • Curtains
  • Washers and dryers
  • Microwaves
  • Portable and window air conditioners
  • Carpets that are not included in building coverage 
  • Original artwork and furs (up to $2,500)
  • Freezers and their contents (refrigerators are not included)

NFIP won’t cover:

  • Any damages not directly caused by flooding like:
    • Damages that come from sewer line or sump-pump backups 
    • Mold and termite damage caused by floodwater
    • Any moisture or mold/mildew damage that could have been prevented 
  • Currency, precious metals and paper valuables like stock certificates
  • Living expenses like temporary housing 
  • Outdoor property like decks, fences, and swimming pools

For residential properties, you have coverage up to $250,000 for the building and $100,000 for the building contents, and for commercial properties, you have coverage up to $500,000 for the building and $500,000 for the building contents.  

Private flood insurance policies are also available if you need more coverage or don’t live in a qualifying area.  

Private Flood Insurance

Private flood insurance offers coverage options not available through the NFIP program like payments for temporary living expenses.  There are higher protection limits for your home and belongings and a shorter waiting period for your policy to take effect (which makes it a great option during hurricane season for those who need coverage right away).  

But deductibles are often higher, and your policy can be canceled or non renewed if your home is too high risk (or you’ve filed too many claims).

The three types of private flood insurance are:

  • A standalone policy that features high coverage limits for homes and personal belongings. 
  • An excess flood policy which is additional insurance coverage once NFIP coverage limits are met. 
  • A flood endorsement on your homeowner’s insurance policy that offers low coverage amounts and can be added for a premium. 

The differences between NFIP and private flood insurance are:

NFIP Private Flood Insurance
Max policy limit – Building

Max policy limit – Contents

$250,000

$100,000

$2,000,000

$500,000

Availability Many communities in all states Limited in higher-risk areas
Waiting period 30 days

*If needed to close a loan, waiting period can be waived

0-14 days

*If needed to close a loan, waiting period can be waived

Accepted by mortgage lenders Yes Yes
Premiums Regulated and standardized Varies 
Replacement cost building coverage Yes

*only for primary residence

Yes
Actual cash value contents coverage  Yes No
Full replacement cost contents coverage No Yes
Full replacement cost contents coverage for second homes No Yes
Loss of use coverage No Yes
Loss avoidance coverage like sandbags, etc No Yes
Debris removal coverage Yes Yes
Policy can be canceled or non-renewed Not usually  Yes
Optional coverage for pool repair and fill  No Yes
Optional coverage for business income  No Yes
Optional coverage for detached structures  No Yes

If a flood, hurricane, or burst pipes has caused water damage to your home, check your insurance policies to see if you’re covered.  And if you’re moving to an area or are concerned about flooding, now you are ready to get a flood insurance policy that gives you a peace-of-mind.  And if you have flood damage and your insurance isn’t covering it, you can always sell your house to real estate investors like us for cash.

About Paul Abrams

About Paul Abrams

Paul Abrams is the Managing Director of Operations at Express Homebuyers, bringing nearly three decades of extensive real estate expertise to our team. His rich background in business and real estate significantly boosts our operational processes and performance. Leading our Operations Department, Paul focuses on identifying growth opportunities and enhancing process efficiency.

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