What is Flood Insurance?

November 06, 2020 by Dan Green

Flood insurance is an insurance policy which pays cash when water enters a home from the outside, and damages a property on the inside.

Flood insurance is available to homeowners and renters. It pays for:

  1. Repairs to the inside of a home that’s been damaged by flood waters
  2. Replacements for personal property inside a home that’s been damaged by flood waters

Insurance companies are specific about “what qualifies as a flood.”

In insurance terms, a flood is when two or more homes are damaged by water; where the water has come from an overflowing natural body of water, from mud flow, or from a heavy rain that overwhelmed the ground’s ability to handle natural water run-off.

All 50 states have experienced floods in recent years.

Flood insurance is required to file an insurance claim for damages after a flood. This is because damage from flooding is specifically excluded from homeowners insurance and renters insurance policies. Separate flood insurance coverage is required.

Floods cause more damage in the United States than any other weather-related event. With proper coverage, though, you can be protected.

As an example of how flood insurance can work, let’s say flood waters reach your street and your car is parked nearby. Water sweeps up your car and carries it into the side of your home, where it knocks loose your siding and puts cracks in your foundation.

Repairs to your car will be covered by your auto insurance’s comprehensive coverage clause. Repairs to your home will be paid by your flood insurance.

Flood insurance pays for other things, too.

It pays to fix electrical and plumbing systems in your home; to replace appliances and heating and cooling systems; to replace carpeting and hardwood flooring; and, to haul debris. It also pays for damages to wardrobes, furniture, and electronics.

Flood insurance is optional and deserves your consideration because there’s an equal chance that you’ll experience a flood in the next 12 months as you will get into a car accident and be injured.

The majority of the United States is at risk for flood waters. And, in many areas, flood insurance is cheap.

It can be even cheaper when you bundle flood insurance with your other insurance coverages, such as homeowners, condo or automobile insurance.

Bundling two or more policies from a single insurer can earn you multi-line discounts.

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