It depends. Powerful storms, inadequate drainage, melting snow, and hurricanes can all cause serious flooding damage, even if you don’t live in a high-risk flood area. According to the National Flood Insurance Program (NFIP), approximately 20% of all flood insurance claims come from areas that are at low to moderate risk for floods. (Source: National Flood Insurance Program, October 2014) Since standard homeowners insurance generally does not cover damage directly caused by flooding, you may want to consider purchasing flood insurance if you live in an area of the country that is prone to severe weather systems that could result in flood damage to your home.
If you do plan on purchasing flood insurance, it is important to note that you can’t simply buy flood insurance as an endorsement to your current homeowners policy. Instead, if you are eligible, you can purchase a separate flood insurance policy through an insurance company that participates in the NFIP.
A flood insurance policy provides flood protection for both your home and its contents. You can purchase up to $250,000 of coverage for the building itself and up to $100,000 of coverage for the contents. If the value of your home exceeds the amount available through the federal program, you may be able to buy excess flood insurance through a private insurer. Excess flood insurance covers amounts above the $250,000 federal limit and, unlike NFIP coverage, may cover your home for its full replacement cost.
Keep in mind that even though flood insurance offers some degree of protection for flood-related basement damage, it doesn’t cover all types of damage. It also doesn’t cover events such as seepage or failure of a sump pump, and damage caused by sewer backups unless it is directly related to a flood. For more information on flood insurance, visit www.floodsmart.gov.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2015
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