What is Flood Insurance and What Does it Cover?

While many homeowners believe they are completely covered by their homeowners insurance plan,

this is simply not the case. While standard homeowners insurance provides coverage for damages due to fire, lighting, hail, explosion and theft, it does not cover flood damages.

Property owners can seek protection for flood damages from a flood insurance policy.

Even if your neighborhood has not experienced flooding in a century, it is wise to purchase specialized flood insurance to cover related damages. You can save hundreds of dollars if you have flood insurance on your side.

The following details about flood insurance coverage is offered by SFGate.com, and provides some fantastic insight for homeowners thinking about buying flood insurance to better protect their home and family.

What Does Flood Insurance Cover?

by Fraser Sherman, Demand Media

If your house is in a floord loan, your lender may require you to buy flood insurance.

There are some events homeowners insurance doesn’t cover, and flood damage is one of them. Even two feet of water can cause expensive damage if it enters your house, according to the Federal Emergency Management Agency, and private flood insurance is expensive. The federal National Flood Insurance Program, which is more affordable, is the insurer most property owners rely on.


The NFIP provides insurance for most forms of real estate, including condominiums, personal homes, rental apartments and businesses, according to the program’s Flood Smart website. You can only buy a federal policy, however, if your local government has adopted floodplain development and construction guidelines that meet FEMA’s approval. Federal insurance is also unavailable in districts the government has designated as environmentally sensitive Coastal Barrier Resource Areas.


You have the option to buy flood coverage for your building, its contents or both, according to the NFIP. Building coverage protects the building and utilities, including wiring and plumbing, some appliances, shelving and cabinets. Contents coverage includes most of your personal property, but only limited coverage for individual valuable items such as jewelry or art. The policy also pays for debris removal.


Flood insurance specifically exempts some forms of damage from coverage, according to Flood Smart. Your policy won’t pay for the loss of money or valuable papers, property and belongings outside a building, such as fences or hot tubs, or mold damage that you could have prevented. Unlike homeowners insurance, flood insurance doesn’t pay for temporary housing while your home is being repaired.


Flood zones are divided into low-to-moderate risk areas, high-risk districts, called Special Flood Hazard Areas, and areas where the exact risk hasn’t been determined. If you own property in an SFHA, you’ll have to buy flood insurance if your loan is backed or insured by federal agencies such as the Veterans Administration or the government-sponsored corporation Freddie Mac. Insurance is also mandatory if your lender is federally regulated. You’ll have to show proof of insurance before you can close on the house; after that, your lender is responsible for checking that you keep up your policy.


Like other forms of insurance, flood insurance only pays up to the limits of the policy, Flood Smart states. If your store has $60,000 in contents coverage, for instance, and the damage is $75,000, you’ll have to cover $15,000 of the damage yourself. A single-family dwelling that is damaged for more than the policy limit may qualify for replacement coverage even if the replacement cost is more than the policy limit.

A flood insurance policy will not cover money or currencies, gold, platinum or stock certificates, cars, other vehicles and goods located outside of the building. But while a flood insurance policy has limits and exclusions, the policy will cover losses that homeowners insurance will not, and property owners should consider this option.

For more information about flood insurance coverage, limitations and options, please contact the insurance agents at TJ Woods Insurance in Worcester, MA or request a free quote.