Although flood damage is typically excluded from a standard renters or homeowners policy, it can be covered with a separate insurance policy issued through the NFIP. Talk to your agent about getting a flood policy for your home.
You may be required to get a flood policy from your lender if you live in an area with a high risk of flooding. But a flood policy could be worth it even if you’re not.
Coverage Limits
If you live in a flood-prone area, you may want to consider getting a separate flood policy—generally outside of your renter’s or homeowners insurance coverage—to cover the things most at risk of being damaged by floodwaters. This type of insurance typically pays to replace or repair things like:
Your mortgage lender and local officials can provide information about your community’s flood risk. Many NFIP policies include up to $250,000 in dwelling and contents coverage. You can purchase excess policies from private insurers to cover your losses above this amount.
Increasing your policy limits could make it less expensive, but you should carefully consider how much your home and belongings are worth before you decide to do so. A quick and easy way to estimate the value of your belongings is by taking a photo inventory of everything in your house. This will help you determine a personal property coverage limit that is sufficient. However, be aware that flood damage isn’t limited to things you can see and touch; it also extends to items in basements and attics.
Deductibles
Flood insurance in Michigan is separate from standard homeowners’ policies and provides more comprehensive protection against damage from flooding. However, a policy can be pricey, and the deductible is a major factor to consider.
Choosing a higher deductible will lower your premium, but it will require you to pay more out of pocket in case of a claim. You can also choose different deductibles for building coverage and content coverage.
Many people assume that flood insurance is only necessary for those living in high-risk areas, but that’s not necessarily true. Floods can occur in any area and can be very costly to repair. And, as climate change continues to impact rainfall patterns, more homes may be at risk for flooding.
If you live in a flood zone, your mortgage lender will likely require you to have a federally-backed National Flood Insurance Program (NFIP) policy. If not, you should still consider a private policy and evaluate your risk. You can also reduce your insurance costs by mitigating flood risks, such as installing flood openings and elevating utilities and machinery.
Policy Exclusions
Homeowners’ insurance policies typically exclude coverage for flood damage. However, suppose your house is in an area with a high risk of flooding. Purchasing a federal National Flood Insurance Program (NFIP) policy may still be worth purchasing.
The NFIP provides two types of protection: building and content coverage. Building coverage protects the structure of your house and the contents within it, including furniture, appliances, and clothing. Contents coverage provides replacement cost protection for the items covered under building coverage. Generally, currency, precious metals, and valuable papers are excluded from coverage, while self-propelled vehicles are not insured under the policy.
The term “flood” is defined under the NFIP policy as water that enters a home through its doors, windows, and walls. It does not cover groundwater seepage or mudslides but includes sewage and community water line backups. Many home insurance companies offer supplemental policies for flood damage, and private insurers are starting to offer excess flood policies designed to provide coverage that goes above the maximums provided by the NFIP.
Coverage Options
Most standard renters or homeowners insurance policies exclude flood damage. Commercial building insurance may or may not include it depending on how prone to flooding the area is. Some providers will even stipulate that advanced protection measures, such as those offered by Proteus waterproofing, should be in place before the coverage is valid. That’s why it’s important to understand what kind of coverage is available and how much you need to protect your home or business against floods.
Many people must purchase flood insurance through the National Flood Insurance Program (NFIP) when they buy a mortgage or refinance a property in a high-risk area. But even people in moderate- to low-risk areas should consider a policy. Floods can occur anywhere, and the damage is often costly to repair.
NFIP policies provide building and contents coverage up to $250,000 for single-family buildings and $100,000 for renters. A preferred risk policy is also available through NFIP for homeowners in moderate- to low-risk areas that offer the same coverage as the standard policy at lower rates.
Calculate the value of your personal possessions, such as furniture, appliances, and electronics, to determine how much coverage you need. Then, figure out how much it would cost to rebuild your house and add in any additional costs you may face, such as hotel stays and food expenses while your home is uninhabitable.
Rates
Just one inch of water can cause $25,000 in damage to a home. That’s why flood insurance, a separate policy outside standard homeowners or renters coverage, is a smart purchase.
The federal National Flood Insurance Program (NFIP) offers building and contents coverage for properties in flood zones and requires it for mortgages secured by homes in high-risk areas. NFIP policies also allow residents to receive advance payments during rebuilding without an adjuster visit, provided they have photos or videos, receipts, and a contractor’s estimate.
Additionally, a home’s previous claims history can be a factor for eligibility and rating purposes. Some carriers offer a discount for homes with no claim history, while others may exclude properties with multiple claims over a certain period.