What Does Flood Insurance Cover Exactly?

Many people are confused by what exactly flood insurance is and what it covers. After Hurricane Katrina hit, many homeowners in New Orleans were upset to find that their losses were not covered, either because they assumed their regular homeowner’s policy covered flooding( which it doesn’t – while Private companies administer flood Insurance, it is provided by the federal government as a separate policy) or they misunderstand just what the flood insurance they did have covered. So, what does flood insurance cover?

In the case of the Katrina victims the problem was something called the anti-concurrent causation clause. In simpler terms this means that if your house was damaged by two different factors at once- in this case both flooding and wind, then the flood damage is not covered. This leads back to the question of what exactly does flood insurance cover? When the sole cause of damage is flooding and the homeowner has the appropriate coverage, their policy will cover several different categories of loss. The first category is structural loss. This includes damage to the roof, walls, and foundation of the building as well as electrical, plumbing, air and heating systems. This also covers permanent fixtures in the house such as flooring and some appliances. In some cases the garage also falls under this category. The second category is personal property loss including clothing, furniture, artwork (up to a limit of 2,500), rugs, stored food and appliances not covered under structural loss. The third category are basement and crawl space losses. This is where it gets a little more complicated. Contrary to popular belief, at least portions of these spaces are covered. Personal property, flooring, cabinetry and refrigerators are not covered. The structural aspects of a basement as well as their mechanical systems are generally covered.

There are limits and exclusions to every flood policy. A limit of $250,000 is put on building loss and $100,000 on personal property loss. For those that wish to get coverage above and beyond this you will have to look into private flood insurance. While this is available, it is pricey and generally only available to homeowners living in low risk areas. For those, the question of what does flood insurance cover may be answered a bit differently. Exclusions to federal flood policies include money, currencies and stock certificates. They also include anything other than a garage located outside the building such as cars, outbuildings, landscaping and swimming pools.