A moderate flood can do a great deal of damage to a home and its personal belongings. A severe flood can completely destroy a home and its contents. Such a loss, if uninsured, could financially devastate most individuals and their families.
In addition to the risk of severe financial loss, individuals purchasing or constructing property in areas subject to severe flooding (a special flood hazard area) may be required to obtain flood insurance as a condition of obtaining a mortgage. Further, the owner of property in a special flood hazard area may be denied federal disaster relief after a flood, unless the owner had previously purchased flood insurance.
Excluded From Standard Policies
In virtually all homeowner's, renter's and condominium unit owner's policies, there is a specific exclusion for loss caused by flood. To cover this peril, a separate flood insurance policy must be purchased.
The term "flood" is generally defined as, "A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties (at least one of which is your property) from: overflow of inland or tidal waters; or the unusual and rapid accumulation or runoff of surface waters from any source; mudflow; or the collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above."
Purchasing Flood Insurance
Flood insurance can be purchased from either the federal government or private insurers and is sold by insurance agents and brokers. The insurance agents receive a commission for policies sold.
With limited exceptions, there is a 30-day waiting period between the time an insured applies for coverage and pays the premium, before the coverage is in effect.
Coverage Under the Policy
A typical residential flood policy provides coverage for "direct physical loss by or from flood," for the following:
- Dwelling: covers damage or loss to the building.
- Personal Property: refers to the contents of a home, such as furniture, appliances or clothing. Certain types of property may be excluded or have a specific dollar limit.
- Debris Removal: covers debris removal of or on an insured property after a flood.