What does my Flood Insurance Cover?

Flood insurance is regulated and managed by the Federal Government or group known as the National Flood Insurance Program. This group is part of FEMA and the flood policies are backed by the federal government. As you are likely aware, flood insurance policies are sold separately from your homeowner’s policy and your typical homeowner’s policy does not cover
flood damage.

Flood insurance only covers damage caused by flooding. Generally speaking, flood insurance will cover damage as a result of significant rain fall, storm surge, a river going over its banks or some other event that causes a large amount of water to enter your home or property.

Flood policies are fairly standard. The maximum coverage for your home under a flood policy is $250,000.00 and $100,000.00 for contents. Please note that unlike your homeowner’s policy that will typically cover a certain amount of contents as part of the policy, flood policies do not cover contents unless you paid for contents coverage.

A flood policy is not a pure replacement policy. Rather, a flood policy will pay the replacement cost or the “actual cash value of actual damages, up to the policy limit.” Whether you are eligible for replacement cost coverage or actual cash value depends on certain conditions. To be eligible for replacement cost coverage, the home must be a single-family dwelling, be your principal residence 80% of the year and your coverage is at least 80% of the full replacement cost or the maximum coverage available.

Even if you qualify for replacement cost coverage you will only be entitled to receive the policy limits under your policy regardless of the size of your loss. Another thing to keep in mind is that flood policies only pay the actual cash value for any damage to your personal property.