Does Your Insurance Cover Flood Damage?

January 22, 2010 – 10:57 pm

If you think your basic homeowners insurance policy will pay for damages in the event of a flood, you’re probably mistaken. Although standard home insurance policies do cover some water-related damage, they do not cover flood-related losses. For that kind of coverage, you need to purchase a freestanding flood insurance policy. In other words, unless you have flood insurance, you could be at risk for massive losses if a flood occurs. Despite the fact that floods are the most common natural disaster in the U.S., few homeowners carry the coverage they need.

Water vs. Flood Damage

Part of the confusion over flood insurance is related to a misunderstanding of how water damage differs from flood damage. A typical home insurance policy will pay for most water damage, but not flood damage. For example, if a sink or bathtub in your home overflows, your home insurance policy would most likely cover the damage. Similarly, if a hailstorm broke a window and soaked part of the interior of your home, a standard homeowners policy would pay for the damages.

However, the damages caused by water-related natural disasters are covered only by flood insurance, not homeowners insurance. The insurance industry defines a flood as the rise and overflow of a body of water onto land that is normally dry. A flooding event must also be temporary and affect more than one property. For instance, if a river near your home overflows and runs into your home, the ensuing losses would be considered flood damage. Likewise, if heavy rainfall causes water to leak into your basement because the soil cannot absorb the water quickly enough, flood insurance, not home insurance, would cover the damage.

Purchasing Coverage

Adding a flood insurance policy to your standard home insurance is always a good idea. Everyone lives in a flood zone, or an area capable of becoming flooded; it’s only a question of how likely a flood is to occur in your area. Flood insurance will help you pay for losses to your belongings as well as the structure of your home after a flooding event. If your community takes part in the National Flood Insurance Program, you can purchase a flood insurance policy for your business or home. Keep in mind that all flood insurance policies require at least a 30-day waiting period. In other words, you cannot purchase coverage in anticipation of an impending flood. Most flood insurance policies are very affordable, so you should be able to purchase sufficient coverage fairly easily.

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