Does My Homeowners Insurance Cover Floods?

Some of the most common perils covered by a standard homeowners insurance policy include financial losses resulting from:

• Fire
• Smoke
• Windstorms
• Hail
• Explosions
• Lightning strikes
• Vandalism
• Theft
• Damage from aircraft, cars or other vehicles

Two perils, however, not covered by standard homeowners insurance policies are floods and earthquakes. In order to be covered for financial losses due to either of these two natural disasters, you must have extra, specialized coverage added to your standard homeowners protection. While adding flood insurance is an option for most homeowners to consider, but not required, there are certain homes where the purchase of flood insurance is required.

When is Flood Insurance Required

As a homeowner, you may be required to carry flood insurance if:

1. Your home is in a high-risk flood area and your mortgage is held by a lender that is federally regulated or insured. Even if your home is in a low or moderate-risk flood zone, your mortgage lender may still have a flood insurance requirement.
2. If you have previously received a federal disaster assistance grant from FEMA following a Presidential Disaster Declaration, you'll need to maintain flood insurance in order to qualify for any future federal aid of this type.

Where to Get Flood Insurance

While some independent insurance companies may offer you flood insurance coverage, most homeowners buying flood insurance get it through the National Flood Insurance Program (NFIP), which is overseen by FEMA, the Federal Emergency Management Agency. According to FEMA, floods are the most common natural disaster occurring in the U.S. and more than 20% of the flood claims submitted come from areas that are outside of a high-risk flood zone. They state that no home, no matter where it's located, is totally risk free from being affected by a flood.

While most flood insurance comes through the NFIP, you don't actually buy your coverage from them but through a regular insurance agent or broker. To determine your degree of risk from flooding, you can consult a flood zone map from FEMA. Go here to learn the flood risk for any address in North Carolina.

To Buy or Not To Buy

Flood insurance is a relatively inexpensive add-on to your standard homeowners insurance coverage, particularly if you live in a low-risk or moderate risk flood zone. As little as one inch of flood water in your home can cause as much as $25,000 in damage. Consider the risk.

How Much Insurance Coverage Should I Have on My Boat?

Unlike automobile insurance,  required by law of all vehicle drivers in North Carolina, boat insurance is not required except for a small fraction of boat owners. This includes commercial fishing and those using their boats for a charter business or for guided fishing tours. Some marinas may require that you have boat insurance in order to utilize their moorage facilities. Additionally, if you've purchased your boat with a loan and the boat is used as collateral, the lending institution will almost certainly require that you maintain a certain amount of insurance on your boat in order to protect their financial interests.

Who Else Should Get Boat Insurance?

Even though not required, it makes good sense to carry insurance coverage for your boat, particularly liability protection. Any type of watercraft can be insured, from the smallest rowboat or canoe to the largest sailboat or motor yacht. Generally speaking, the larger and more powerful your boat the more coverage you should consider. Bigger boats and more powerful boats are associated with higher risk, which should be taken into account when researching your watercraft insurance needs.

Speedboats and watercraft used for pulling water skiers have inherently heightened risk for both accidents and liability incidents and should be covered by enough boat insurance to pay for damages to both properties and for bodily injuries. Some experts suggest that a million dollars of liability coverage should be considered. Typical parts of a boat insurance policy may include:

• Liability for property damage – pays toward repair or replacement of a third party's property due to an accident caused by you or your boat
• Liability for bodily injury damage – pays toward injuries sustained by others in an accident deemed to be your fault
• Collision damage – pays toward repair or replacement of your boat after an accident
• Hull coverage – pays toward damages suffered by your boat and, typically, your trailer, motor, accessories and equipment
• Fuel spillage – pays towards and cleanup of any fuel spills caused by you or your boat

How Much is Too Much?

There are lots of options for boat insurance policies, many of which are written specifically to the insured. Only buy the coverage you need, but make sure you're covering your legal and contractual requirements and enough coverage to satisfy your need to be comfortable to your risk exposure. A qualified agent or broker can help you determine these things.

Does the National Flood Insurance Program Cover Basements?

With so much flooding plaguing our country of late, it's no wonder that more and more homeowners are learning about the importance of flood insurance. Since financial losses resulting from flooding are not covered by standard homeowners insurance policies, it's up to individual homeowners to seek out additional flood insurance coverage to add to their standard homeowner's policy. This can be done through the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Agency (FEMA). Although flood insurance is purchased through the National Flood Insurance Program, it's actually sold through standard insurance company agents or brokers. Some select private insurance companies also offer flood insurance.

What's Covered by Flood Insurance?

Similar to the way standard homeowner's insurance is set up, flood insurance has a coverage component that provides protection for losses sustained to your structure and a separate component that provides protection for loss or damage to your personal possessions. Typically, there's a dollar amount cap of $250,000 for structural damage and $100,000 for your possessions. These two components are purchased separately and each has its own deductible amount. The NFIP recommends purchasing both components.

Flood coverage for your structure includes systems considered essential such as plumbing, electrical, water heaters, heat pumps and furnaces. You should also be covered for permanent carpeting laid over unfinished floors, other carpets over wood floors, window blinds and curtains. Wallboard, paneling, bookcases and cabinets permanently installed are also covered, but if only some cabinets are damaged only those will be replaced.

Personal Property Coverage

Personal possessions such as electronic gear, furniture and clothing are covered if you've purchased the personal possessions insurance component, but not if they're stored in the basement. Valuables such as artwork and furs are covered, but there's a $2,500 cap on these. Moveable appliances such as window-mount A/Cs, microwaves, washers, dryers, refrigerators and freezers (and the food in them) are considered personal possessions.

Basement Exclusions

Flood insurance doesn't cover improvements to your basement such as finished ceilings, floors or walls or any personal possessions found in the basement. Basements are defined as any area in your home that's below ground level. Another exclusion found in flood insurance is any damage caused by the movement of earth, even if that movement is caused by flooding. You should also note that a flood insurance policy typically has a 30-day waiting period before it goes into effect after purchase.