What Does Flood Insurance Cover?

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Most homeowners’ insurance policies do not cover flood damage. Instead, when homeowners live in an area at risk for floods, they may choose to purchase a separate flood insurance policy. In high-risk flood zones, mortgage lenders may require it. A flood insurance policy covers damage to a home and property inside of it caused by rising bodies of water or surface water accumulation, up to either the value of the home or the cost to repair it, whichever is less. While there are private flood insurance policies available, many homeowners purchase a policy through the National Flood Insurance Program (NFIP), operated by the Federal Emergency Management Agency (FEMA).

TL;DR (Too Long; Didn't Read)

Flood insurance covers damage to your home’s structure, systems, appliances and personal property up to the value of your property or the cost to rebuild, whichever is the less.

What is Considered Flood Damage?

Whether your damaged property and personal items are officially considered flood damage depends on whether your area was afflicted by a flood. According to FEMA, a flood occurs when water covers at least 2 acres of land that is usually dry, or water damages at least two properties, one of which is yours.

The water that damages multiple properties or acres must come from:

  • Overflowing tidal or inland waters, such as an ocean, sea, lake or river
  • Unusual and rapid accumulation or runoff of surface water from any source
  • Mudflow
  • Collapse or subsidence of land along the shore of a lake or other body of water due to erosion or due to waves or water currents greater than the anticipated cyclical levels.

If your home is damaged by your sump pump or sewer backing up, that is not considered flood damage. Also, just because you suffered heavy rains that leaked into your home does not mean the area suffered a flood. The heavy rains must have led to one of the factors above.

Do I Have to Have Flood Insurance?

Whether you are required to have flood insurance depends on where you live. In areas with low or moderate risks of flooding, whether you purchase flood insurance depends on your preferences or your mortgage lender’s policies. If you live in a high-risk flood area, or what FEMA calls a Special Flood Hazard Area, then the federal government mandates that mortgage lenders require flood insurance.

What is FEMA and What Does it Do?

FEMA is a federal agency with the mission of helping people in the U.S. before, during and after disasters such as hurricanes, flooding and tornadoes. FEMA is best known for responding to areas after a disaster has occurred in order to help those affected. The agency coordinates clean-up efforts, so the area can be repaired or rebuilt. The agency also offers information for homeowners regarding natural disasters and proactive services like the NFIP.

What Does the NFIP Cover?

If you have a flood insurance policy through NFIP and you suffer damage to your home and belongings in a flood, then it may cover the cost of:

  • Your home’s foundation
  • Your home’s essential systems, like electricity, plumbing, heating and central air
  • Appliances
  • Carpeting and window treatments
  • Built-in cabinets and bookcases
  • Personal property, such as electronics, furniture and clothing
  • Valuables, like artwork

There are limitations to federal flood insurance coverage, particularly in regard to basements. An NFIP policy provides only limited coverage for damage to basements, crawlspaces and areas beneath a full story as well as the items in them.