What Does Flood Insurance Cover?

After Hurricane Harvey devastated the Houston area and Hurricane Harvey flooded much of coastal Florida, many people are asking what does flood insurance cover. It is estimated that 80% of homeowners negatively affected by Hurricane Harvey DID NOT have flood insurance.

Just imagine this scenario: A mortgage to pay, a house to rebuild out of pocket, a car to replace because it also got flood, and children to feed. Can you escape this financial calamity? If the answer is “no,” then get flood insurance and comprehensive auto insurance. These 100 year, or 500 year storms are happening more often than you think.

Here's a rundown of what is-and isn't-covered, according to the Federal Emergency Management Agency, which administers the National Flood Insurance Program.

Flood risk areas of the United States
Flood Risk Map

What Does Flood Insurance Cover

Essential systems in the home. This includes electrical and plumbing systems, furnaces, water heaters, central air conditioners, heat pumps, and sump pumps. It also includes cisterns and the water in them, fuel tanks and the fuel in them, solar energy equipment, water tanks and pumps.

Appliances. Refrigerators, ranges, and built-in appliances like dishwashers, washing machines, and dryers are all usually covered. So too are portable window air conditioners and freezers and the food in them. Food inside refrigerators, however, is not covered.

Carpeting and window treatments. If you have permanently installed carpeting over an unfinished floor, or any other kinds of carpets over wooden floors, your policy should cover them. Your policy should also include window blinds and curtains.

Permanently installed paneling, wallboard, bookcases, and cabinets. If you have to replace your cabinets, your policy will pay only for the ones that were damaged. That means that if some cabinets were ruined but others were not affected you might have trouble getting cabinets that match the older ones.

Foundation walls, anchorage systems, and staircases attached to the building. There is an exclusion for “loss caused directly by earth movement even if the earth movement is caused by flood.”

A detached garage, used for limited storage or parking. You can use up to 10 percent of your total building coverage toward your garage, but that amount will be subtracted from the total amount of building coverage available to you.

Personal property. This includes clothing, furniture, and electronic equipment-though only if they're not stored in the basement.

Certain valuables. Your policy is likely to cover items such as original artwork and furs, up to $2,500 in value.

Other coverage. Some events are covered even if they're not strictly floods, like groundwater seepage and mudslides. These would include a neighbor's above-ground swimming pool collapsing and water flows into your home, or a water main break that damages your home and at least one other in your neighborhood.

Hurricane Irma Is the Size of Florida
Hurricane Irma Is the Size of Florida

What Flood Insurance Does Not Cover

Furniture or other personal property located in a basement, crawl space, or “walkout” basement isn't covered, including bookcases, window treatments, carpet, TVs, audio systems.

Federal flood insurance coverage is also capped at $250,000 per building and $100,000 for contents, though you can purchase policies with lower limits.

There are separate deductibles for your dwelling and contents coverages. Higher coverage limits are available for nonresidential structure and contents policies.

How to Buy Flood Insurance

Purchasers of flood insurance face a 30-day waiting period before the policy is activated. In other words, you can't just get a policy working in one day if you know a CAT 5 hurricane is going to hit your city within the next couple of days.

One of the reasons why I sold my house in the Marina, San Francisco was because it was on sand that liquefies if a large enough earthquake hits. Earthquake insurance is too expensive to get ($5,000 a year premiums, 10% deductible based on the value of your house), so I decided to just get rid of it after 13 years.

You can buy national flood insurance directly from the National Flood Insurance Program, as well as through dozens of private insurance companies throughout the country. Check with an agent who sells homeowners coverage for details.

People who live in low- and moderate-risk areas and buy federal flood insurance pay standard premiums set by FEMA. Those rates are the same regardless of where you buy your coverage.

To get an estimate of your annual premium and a link to area agents who sell federal flood insurance, visit the FEMA Flood Map Service Center, plug in your property address, and click on “Interactive Map.” This will take you to the official flood insurance rate map for your area. To request an agent referral, contact the National Flood Insurance Program Referral Call Center at (888) 379-9531.

Please check whether you live in a high risk zone. If you do, and haven't been paying flood insurance for years, “bank those savings” and consider finally buying some insurance. The cost of disaster insurance is small relative to all that you could lose.

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Auto Insurance Basics For Everyone To Know

About the Author: Sam worked in finance for 13 years. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income. He spends time playing tennis, taking care of his family, and writing online to help others achieve financial freedom too.

Sam started Financial Samurai in 2009 and has grown it to be one of the largest independently owned personal finance sites in the world.