Flood Insurance 101: What’s Covered—and What’s Not
Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
You do not need to live near a body of water to consider purchasing flood insurance. Even homeowners who do not live near oceans, rivers, lakes, or streams may be at risk for flood-related damage to their properties and may want to consider a flood insurance policy.
According to the National Flood Insurance Program, a flood is defined as a general and temporary condition where two or more acres of normally dry land, or two or more properties on a block, are inundated by water or mudflow, causing damage to a dwelling or its contents.
Flooding can be caused by a variety of things, including overflowing lakes, rivers, or streams, or by melting snow or ice. Even broken sewer mains can cause flooding and can be covered by flood insurance if the break floods two or more homes.
Before you rush out and buy flood insurance, though, let’s examine the important characteristics of a standard flood policy and what it does (and does not) cover.
What is not covered by a standard flood policy?
Any of your personal belongings that are located in a basement, such as furniture, electronics, and clothing, are not covered under contents coverage. For the purposes of flood insurance, the definition of a basement is any area of the building, including a sunken room or sunken portion of a room, having its floor below ground level on all sides. So if, for example, you have a man cave in the basement, complete with an expensive entertainment center and pool table, it will not be covered in the event of a flood.
In addition, there is no coverage for damage caused by moisture, mildew, or mold that could have been avoided by the property owner—whether contents are in a basement or not. This includes mold or mildew that could have been prevented by pulling up wet carpet, setting up fans, or calling in an emergency clean-up service. Contents outside of the building, such as patio furniture, hot tubs, swing sets, swimming pools, plants, and trees, are also not covered.
In terms of dwelling coverage, there is no coverage for paneling, bookcases, carpeting, tile, and drywall for walls and ceilings in any basement area as defined above. There is never any coverage for wells, septic systems, walkways, decks, fences, or seawalls, and there is no coverage for loss of living expenses, such as temporary housing or loss of use.
What is covered by a standard flood insurance policy?
Under contents coverage, any personal belongings that are located on the first floor or higher are covered. This includes items like furniture, electronics, clothing, curtains, portable air conditioning units, washers and dryers, kitchen supplies, and area rugs. This also includes refrigerators and freezers and the food inside them
Generally, the building and its foundation, electrical and plumbing systems, central air conditioning equipment, furnaces, water heaters, fuel tanks, heat pumps, and sump pumps are covered under dwelling coverage. Debris removal is also generally included.
If you are considering purchasing flood insurance, here are five things to remember:
1. Unless you are closing on a new home, there is a 30-day waiting period when purchasing a flood policy. This means you can’t rush out and buy a flood insurance policy when you hear a big storm is on its way—you have to buy it in advance.
2. The maximum dwelling limit on a standard flood policy for a personal home is $250,000, and you will need to purchase coverage for the contents of your home separately. It is not automatically included.
3. If you have a detached garage, a separate flood policy is needed as well. The minimum deductible is $1,000, with dwelling and contents coverage each having this separate deductible. There is an option to purchase policies with higher deductibles to reduce the premiums.
4. A flood policy pays actual cash value (ACV) of the damages or up to the policy limit. It will only pay on a replacement cost basis if your dwelling coverage is up to 80 percent of the full replacement cost of your building. For example: Say your home’s replacement cost is $500,000, and it was totaled due to a flood. If you purchased a standard flood policy with the maximum dwelling limit, you would only receive $250,000 to pay for the damage.
5. If you have a high-value home, you may want to consider a separate excess flood policy. This policy would offer full replacement cost coverage on your home and would kick in after the full payout of your standard flood policy. For more information on excess flood coverage, call your insurance agent.
Of course, these are just some of the important highlights to consider when deciding whether a flood policy is worth purchasing. There are a few insurance carriers that offer flood policies with much broader coverage, and they may expect to be the carrier for your homeowners policy as well. For a more detailed explanation, check out www.floodsmart.gov , or simply call your insurance agent.
Heidi Petschauer Fox graduated from St. John’s University in Queens, N.Y., in 1983 with a B.S. in management. She joined her late father’s firm, Petschauer Insurance, in 1982, became principal in 1995, and now shares ownership with her partner and cousin, Erwin Petschauer. She received her Certified Insurance Counselor (CIC) designation in 1997. She currently facilitates the professional and creative development of the entire Petschauer team and manages the personal lines and social media departments.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.