What Flood Insurance Covers

What's covered by flood insurance-and what's not.

Rating a flood insurance policy is complicated. So the following covers some of the things we think will be useful for you to know. For more information, download FEMA's National Flood Insurance Program Summary of Coverage, refer to your NFIP flood insurance policy, or contact our insurance agency at (800) 862-2070 for information.

Flood insurance is different.

Most of us know how a typical homeowners insurance policy works-one policy covers both damage to the home and damage to personal possessions. However, NFIP flood insurance is different. Coverage for "Building Property" and for "Personal Property" are separate. This means that to get coverage for both, you will need to purchase each separately. This does not apply for low-risk PRP policies.

The following lists provide general guidance on items covered and not covered by flood insurance:

What is insured under Building Property coverage?

• The insured building and its foundation
• The electrical and plumbing systems
• Central air conditioning equipment, furnaces, and water heaters
• Refrigerators, cooking stoves, and built-in appliances such as dishwashers
• Permanently installed carpeting over an unfinished floor
• Permanently installed paneling, wallboard, bookcases, and cabinets
• Window blinds
• Detached garages (up to 10% of Building Property coverage). Detached buildings (other than garages) require a separate Building Property policy
• Debris removal

What is insured under Personal Property coverage?

• Personal belongings such as clothing, furniture, and electronic equipment.
• Curtains.
• Portable and window air conditioners.
• Portable microwave ovens and portable dishwashers.
• Carpets not included in building coverage (see above).
• Clothes washers and dryers.
• Food freezers and the food in them.
• Certain valuable items such as original artwork and furs (up to $2,500).

What is not insured by either the Building Property or Personal Property Coverage?

• Damage caused by moisture, mildew, or mold that could have been avoided by the property owner
• Currency, precious metals, and valuable papers such as stock certificates.
• Property and belongings outside of a building such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs, and swimming pools.
• Living expenses such as temporary housing
• Financial losses caused by business interruption or loss of use of insured property.
• Most self-propelled vehicles such as cars, including their parts (see Section IV.5 in your NFIP policy).

* Excerpted from The FEMA National Flood Insurance Program Summary of Coverage

Maximum NFIP policy coverage
The maximum amount of coverage available in the NFIP's Regular Program for residential properties is $250,000 on a structure and $100,000 on contents. The NFIP's Emergency Program has lower maximum coverage amounts of $35,000 on a structure and $10,000 on contents.

Insurance payouts: actual cash vs. replacement cost.

Most flood policies will pay claims based on one of two standard methods when it comes to valuing property. Be sure you understand these methods of reimbursement, so there are no surprises when and if disaster strikes.

• Actual Cash Value (ACV) - The cost to replace an insured item of property at the time of loss less the value of its physical depreciation. For example, if your television is 10 years old, you'll receive a payout for its value today, not what it would cost to replace it at today's prices. Some building items are always priced at ACV, such as wall-to-wall carpeting. Be sure to verify with your insurance agent or see your policy for details.
• Replacement Cost Value (RCV) - Pays claims based on today's cost to replace the item or part of the building. This type of coverage is available only on owner-occupied single-family dwellings, and you must have purchased coverage in an amount equal to at least 80% of the full replacement cost of the building or the maximum coverage available from the NFIP. However, an NFIP policy does not pay more than the policy limit, nor is it a guaranteed replacement cost policy.

Deductibles: How deep are your pockets?

Choosing the amount of your deductibles is an important decision. If you purchase both Building Property Coverage and Personal Property Coverage, there is a separate deductible for each policy. To save money upfront, you may consider choosing a higher deductible, but keep in mind that in the event of a loss you'll be required to pay this amount out of your own pocket before flood insurance takes effect. In addition, your lender may need to approve a higher-than-standard deductible. As with car or homeowners insurance, choosing a higher deductible will lower your premium, but it will also reduce your claim payment at the time of loss.

A final note about coverage

Although this is general information about flood insurance coverage, please be aware that your flood insurance policy, your application, and any endorsements, including the declarations page, make up your official contract of insurance. Any differences between this information and your policy will be resolved in favor of your policy. If you have questions about flood insurance, we recommend that you contact our insurance agency at (800) 862-2070 for assistance.