Floods can come in quickly and leave damage and destruction when they leave. Many homeowners know that floods are a concern to have, especially if you live in a flood zone. However, many homeowners make the mistake of assuming that their homeowners insurance covers flood damage. Flood insurance is a separate product from homeowners insurance. Only a flood insurance policy will financially protect you from flood damage costs.

Flood insurance is designed to provide an alternative to disaster assistance to meet the costs or repairing flood damage to buildings and their contents. Flood insurance is federally backed via the National Flood Insurance Program (NFIP). The NFIP is overseen by the Federal Emergency Management Agency which enables homeowners, business owners, and renters in participating communities to purchase flood insurance. This means that is you fall into one of the following categories you qualify to be able to purchase flood insurance.

  • If you live or own a business in a high-risk area
  • If you live or own a business in a moderate-low risk area
  • If your home or business has been flooded before
  • If your mortgage company doesn’t require it
  • If you have a loan from a federally regulated and insured lender on your home or business

There are two main types of flood insurance that you should be aware of when considering purchasing flood insurance. The first type is building property coverage. Building property coverage is coverage for the insured building and foundation. It could help to cover electrical and plumbing systems, permanently installed flooring and windows, some large appliances, detached garages, and debris removal. The second type of flood insurance is personal property coverage. Personal property coverage covers things such as clothing, furniture, portable appliances, food freezers and food in them, and certain valuable items. Your flood insurance policy will be dependent on your needs and this should be discussed with an insurance agent to ensure that everything you need to be covered has coverage.

One main concern that most people have with flood insurance is that it will be expensive. The cost for a flood insurance policy will differ depending on your needs, location and risk, and length of the policy. On average, homeowners can insure a home for up to $250,000 and its contents for up to $100,000. Renters can cover their belongings for up to $100,000. Business owners can insure a building and its contents for up to $500,000. Based on these averages, FEMA says that the average premium yearly flood insurance policy can be about $700 per year. Residents who live in mid or low risk areas may also qualify for a lower premium due to their lowered risk.

Is flood insurance my only option? No. The alternative to flood insurance is disaster assistance. However, disaster assistance only becomes an option if the President declares a federal disaster and is typically a loan that needs to be repaid with interest. Flood insurance claims are paid regardless of a federal disaster declaration. According to FEMA, total flood insurance claims in the United States averaged more than $3.5 billion per year from 2005-2014 and the average claim in the past 5 years has been around $42,000. Could you pay that out of pocket if your home and/or belongings were to be damaged in a flood?

Everyone is at risk of being affected by a flood. Floods can happen as the result of heavy rains, snowmelt, overloaded drainage systems, land development runoff, and many more reasons. This means that even if you do not live near a coast or river that you can be affected by a flood. FEMA claims that it only takes an inch of water to cause thousands of dollars of damage. Floods are the number 1 natural disaster in the United States and in the past 5 years, all 50 states have experienced flooding. The best way to ensure that you are covered and protected is to discuss flood insurance with your insurance agent.

For flood insurance and flood risk information, visit floodsmart.gov. To learn more about obtaining a flood insurance policy, call Gannon Associates Insurance at 1-877-426-6667.