FLOOD is an excluded coverage on all home insurance policies. If you need, or want coverage for water damage from outside your property, you will need to purchase it separately on a flood policy. But while a flood policy provides insurance for water exposed property, it is not at all like your Home Insurance Policy.
Here is what you need to know:
1. Flood Insurance is issued primarily through the National Flood Insurance Program (NFIP) that is governed by the Federal Emergency Management Association (FEMA).
NFIP provides for very limited coverage:
$250,000 for Building
$100,000 for Contents
At no time during a claim is more than $250,000 for the dwelling or $100,000 for contents paid regardless of special NFIP language. If you need more coverage many times you can buy Excess Flood coverage, but not through the NFIP.
2. If you have a mortgage and you are in a designated Special Flood Hazard Area (SFHA), you are required to have flood insurance. NO EXCEPTIONS
3. You do not need to be in a Special Flood Hazard Area to purchase flood insurance; it is available for all properties.
4. The premiums for basic flood coverage are determined by your Flood Zone, which is identified by FEMA, and generally confirmed by an elevation certificate. The important number is the elevation of the lowest floor of your house in relation to the Base Flood Elevation.
5. Here is the first critical difference in Flood Coverage. The dwelling has replacement cost coverage and the contents are limited to Actual Cash Value, but it is not a replacement cost contract. If your property is damaged by flood, your recovery is reduced by depreciation; in other words, the value is reduced by how long you have owned the items. Items of unique or special value such as antiques or art are not recognized for their real value. YOU WILL NEVER BE MADE WHOLE FOR YOUR FLOOD LOSS!
6. If any part of your dwelling is located in a higher Special Flood Hazard Area, the zone and rate determination for your property defers to the higher zone.
7. If your garage is used to only house your vehicles, 10% of the building limit can be applied to garage damage. If you use it for an office, or there is an apartment above, it is not covered under the home flood policy. You have to write a separate policy to insure it or other detached structures like a pool house.
8. Most property below the residence primary living area of a home is not covered, so other than your mechanicals in the basement or lower level (below grade) there is no coverage. There is no building coverage for a finished basement.
9. A building needs to be 51% above ground to be eligible for flood coverage.
10. Residential flood coverage can insure a 1-4 family house, but only the owner can buy building coverage. Renters may buy coverage for their contents.
11. If you suffer flood damage, claims have to be reported within sixty days (for Superstorm Sandy they extended that limit to one year).
12. Your selected deductible will apply separately to your building damage claim and then also to your contents claim.
13. VERY IMPORTANT - For a NFIP flood claim to apply, the water damage must have occurred to at least two adjacent properties or affect an area of more than two acres.
14. There is NO consequential coverage on a flood policy, such as Additional Living Expense (ALE) that is found on a regular home insurance policy. If you are forced out of your home due to flood, the cost of alternate housing is not covered.
16. There is no debris removal coverage, unless the debris is in the house or leaning on it.
17. Flood insurance will pay $1,000 for sand bag reimbursement and $1,000 to safeguard property but this is part of the total policy limit.
18. If you suffer damage that incurs an increase cost of construction due to building code the community must issue a substantial damage designation, and then there is up to $30,000 of additional coverage applicable (but never more than the policy limit).
19. Building claims for repairs are limited to two feet above the high water mark of the flood.