Flood Insurance: What You Need to Know

Flood insurance is important for homes and businesses but is typically excluded from standard property and homeowner insurance. Flood insurance covers water damage caused by sudden and unexpected water in the home. Flood insurance covers damage caused by water coming into your property from the outside, such as rainwater overflow, a rising body of water, and water surges from a nearby storm drain.

For some property owners, flood insurance is a required element for financing. Even if not required, flood insurance is still a smart idea.  No matter where your property is located, flood damage can occur. Let’s go into the complete basics of flood insurance.

When Flood Insurance is Required

Flood insurance is often required by lenders for homeowners and business investors who seek to buy a new property. If the property lies in a flood zone, then your lender will likely require flood insurance to ensure the safety and value of the property you are buying with the loan. In fact, it’s not just a preference, federal law requires lenders to make sure mortgage holders inside flood zones have flood insurance to cover potential losses.

When You Should Choose Optional Flood Insurance

Even if you are not required to carry flood insurance it is still worthy of consideration. Flood insurance may be useful outside of flood zones where heavy rains are common or where the water table is high. With extreme weather patterns affecting a variety of areas, flood damage may become an increasingly common occurrence.

Most importantly, flood damage can be especially expensive.  Even a relatively minor flood event can cause tens of thousands of dollars (or more) in property damage which is not covered by standard policies.  Without flood insurance, you may be responsible for those costs.

Building Coverage

Building coverage insures your walls, foundation, cabinetry, HVAC, and other major appliances, along with your internal electrical and plumbing system. A building policy is essential to flood insurance, as water damage can put the entire building at risk.

Contents Coverage

Your flood insurance coverage should also include a contents section. A contents policy covers the “contents” of your building, such as furniture, decorations, and equipment. If your chairs and couches are ruined in the flood, or if your electronics are waterlogged, your flood insurance may compensate for your loss.

Exclusions

Just like your standard property insurance policy, a flood policy has certain exclusions.  Often, detached structures, trees, shrubbery, fences, and pools are not covered.  It is also important to be mindful of the limits of insurance.  Be sure to read the policy or talk with our agent about what your insurance does, and does not, cover.

Could your home or business benefit from flood coverage? Flood insurance is essential for protecting your structure and the value of contents inside your property in the event of heavy rains or other types of outside flooding. Whether you are required by your lender to carry flood insurance or thinking ahead to the next watery disaster, contact us today. We look forward to helping you find the right insurance for your property and planning.