The Coverage and Exclusions of Flood Insurance

| April 13, 2018

Most homeowners insurance policies don’t cover flood damage. Generally, you have to buy specified flood insurance, either through the National Flood Insurance Program (NFIP) or another outlet.

Still, even if you get a flood insurance policy, that doesn’t mean it offers unlimited coverage. Like all insurance, flood coverage will have its limits. These might restrict how much money you can get to repair your home or replace possessions. Therefore, take a good look at your policy options. By learning where limits exist, you can do what you can to minimize them.

Understanding the Upper Limits of Policies

Most insurance policies have coverage limits. They will only pay out a certain amount of money for damage to your home or personal possessions. For example, a common NFIP coverage option contains up to $250,000 in structure coverage and up to $100,000 in possessions coverage.

This means that you will receive at most $250,000 to rebuild the home and $100,000 to replace damaged belongings. Still, some people, like those with high-value homes, need additional coverage. If you fall into this bracket, you might need to look at a different policy. You might need excess flood insurance to extend protection to these properties.

Policy Exclusions

Once you get flood insurance, you likely will still face restrictions. Policies frequently limit or exclude the property for which they will provide coverage. Some of these exclusions might include:

  • Precious metals, money and stocks
  • Trees, plants, other foliage and outdoor fixtures
  • Swimming pools, wells and septic tanks
  • Cars
  • Decks, retaining walls and fences
  • Basements and items inside it. Even if items would normally have flood coverage, putting them in the basement might cause coverage to void.

Keep in mind, your policy also might place limits on how much money you can receive per item to make repairs. Sometimes, this might cover certain items. In others, it will not. For example, you might only receive a couple thousand dollars for items like jewelry, art or electronics. Per-item limits might mean you cannot fully replace these expensive items.

Take the time to talk to your flood insurance provider about the value of your home and possessions. Get policy limits to provide adequate protection for the majority of your belongings. Ask your agent to specifically explain any exclusions on your policy. They can help you understand scenarios when you might have coverage.

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