If you live in a flood plain, your homeowner's insurance company may require you to carry flood insurance. If it is not the insurance company itself, your mortgage lender may demand it. Yet, what exactly does flood insurance cover? Where does flood insurance begin and homeowner's insurance end? They are, for all intents and purposes, two separate home coverage policies. To be ready for any floods, you should know what is covered and how to file when you do have flood damage.
Three Kinds of Policies and Coverage for Flood Damage
Here is a kicker; there are actually three kinds of flood policies. If you buy the National Flood Insurance Policy, which is actually a government insurance program, it will cover the costs of rebuilding your home for up to a quarter of a million dollars. The premiums are fairly reasonable.
However, the NFIP has a second policy that covers personal losses. If you do not buy both, what you purchase will only cover what it is supposed to cover (i.e., the personal policy only covers $100,000 in personal losses like furniture and clothing—it does not cover home rebuilding!). Hence, those are two policies from the same agency that you would have to purchase if you go that route.
Then there is private flood insurance. You can customize this to fit your needs. Most people only choose this option when they do not have access to NFIP or they are denied coverage by NFIP.
Overage insurance is for people who have homes with values in excess of $250,000. This is extra flood insurance you would need if your home and valuable items inside are destroyed by the high waters of a flood. Thankfully, most people do not need this type of insurance.
Covering Home or Covering Personal Goods
Many flood policies cover one of two things. Either the policy covers the complete rebuild of your home, or it covers all of your personal goods that were saturated with flood water and are now ruined. If you want absolutely everything covered and replaced, you may find that you have to buy two separate flood insurance policies. Some companies do sell an all-encompassing flood insurance that covers personal goods AND the house.
Homeowner's Insurance Coverage and Flood Damage
Homeowner's insurance will not cover damage caused by flood. If and when you need to file a claim for flood damage, you have to file with the flood insurance company. The only time flooding is covered under homeowner's insurance is when your pipes burst. Then the homeowner's insurance company will cover repairs and remediation damages.
For more information, contact an insurance company like ALTRE Insurance Agency Inc.