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.

Is It Okay to Skip Flood Insurance?

For more than 50 years, the National Flood Insurance Program (NFIP), under the administration of FEMA (Federal Emergency Management Agency), has been working hard to reduce losses suffered due to flooding by home and business owners in the US. It does this by providing affordable flood insurance, by educating the public about the risks flooding poses and by encouraging communities to not only adopt but to enforce flood plain management regulations.

Who Needs Flood Insurance?

No home is completely risk-free from experiencing flood damage. According to FEMA, floods are the most common natural disaster in the country and flood damage is almost never covered in your standard homeowner's insurance policy. Furthermore, FEMA says that 98% of all counties in the U.S. have experienced flooding at one time or another. It's simple – if it rains where you live, you're at some risk of experiencing flooding.

This means you don't have to live in a coastal area or next to a river to be in danger of flooding. While it's true that homes located in low-risk flood zones are less likely to be affected by flooding, it's important to understand that “low risk” doesn't mean “no risk”.

Flood insurance is like other types of insurance in that you don't really want it until you need it, but if you wait until you need it to get it, you've waited too long! You should also be advised that, when you get federally-backed flood coverage through the NFIP, there's a 30-day waiting period before that coverage activates.

Skipping Flood Insurance

If you've been living without flood insurance, perhaps you're now thinking it may not be worth the risk. If you live in a high-risk flood zone you're probably already covered, since your mortgage company likely requires it. But consider this: more than 20% of the homes and businesses affected by flooding are in the low- or moderate-risk flood zones, and as little as one inch of flood water in your home or business can cause as much as $25,000 worth of damage. Insurance that costs just a couple or a few hundred dollars annually to maintain is well worth the protection you receive against these losses. We've seen a rash of floods all over the country in the past few years and, if history is an indicator, flooding incidents just look to be getting worse.

Greensboro Home Insurance Hazards: Storms

Your Greensboro home insurance policy likely covers many types of storm damage but not all. Flooding, for example, that occurs as the result of a storm will not be covered unless you've made flood insurance a part of your comprehensive homeowner's protection. This requires that you obtain a separate, special flood insurance policy, usually from the federal government's National Flood Insurance Program, available through FEMA Federal Emergency Management Agency). A few, select number of private insurers may also offer excess flood insurance.

It's interesting to note that, according to FEMA, 90% of the natural disasters that occur in the United States involve some form of flood damage. Even homeowners living in areas considered low risk for floods can see that, according to FEMA, flood insurance may be something to consider. It's affordable and easy to buy.

What Storm Damage Standard Greensboro Home Insurance Typically Covers

The types of storm damage typically covered by a standard homeowner's insurance policy include the following:

• Water damage
• Ice damage
• Lightning strikes
• Damaging power surges
• Wind
• Hail
• Fallen trees

Water damage coverage can vary, depending on your policy, so it's important to know what your particular policy will pay and for what. Ice or water damage to your roof is likely covered but water flooding your basement may not be covered.

If lightning strikes your home and causes fire or smoke damage that will likely be covered. Some, but not all, policies cover power surges that damage appliances or electronic components. Some policies may also pay for food ruined as a result of a power outage but this type of coverage is less common. Remember, however, that you can buy insurance to cover just about any type of peril if you're willing to pay the premium required. Talk to your insurance representative to determine what you have, what's available and what the costs are to put in place the exact coverage you want.

Other Storm Damage

Violent storms may be responsible for numerous different types of damage to your home, whether it's strong winds that dislodge roof shingles or knock a tree over into the roof, hail that dents your vinyl siding or hard-driving rain or snow that breaks a window and damages your home's interior or household possessions. All these are likely covered but, again, insurance policies are unique and yours should be thoroughly read and understood. Consult your insurance broker with any questions.  

Disaster Insurance: How to Be Ready for the Worst Case Scenario

Whether floods, hurricanes, tornadoes, wildfires or earthquakes, different types of disasters have affected North Carolina in the past and will continue to do so in the future. While our area here in the Triad Region is fairly exempt from wildfires or earthquakes, hurricanes and floods are an ever-present danger and the only way to get ready for when they strike is to be proactive in your preparation. This includes readying your home or business structurally for the advent of any likely disaster scenarios, having sufficient equipment and supplies in place to exist safely if such an event occurs and being covered by the proper type and amount of disaster insurance to help in rebuilding in the aftermath of a suffered disaster.

Evaluating your exposure to potential disasters such as floods can be accomplished by determining your proximity to flood plains in your local area. Since most homeowner’s insurance policies don’t cover flood damage, you’ll have to make a decision whether or not to acquire flood insurance in addition to your regular coverage. Remember, just because you don’t live within a flood plain area doesn’t mean you can’t be subjected to flood damage.

Review Your Disaster Insurance Coverage

Get together with your insurance agent and determine whether the coverage you have is sufficient and that you understand what coverage you have in place. If you own a business you may want to look into obtaining business interruption insurance. This can help you meet your expenses in the event that a disaster forces you to temporarily close your business. Statistics show that approximately 25% of the businesses that are forced to close due to a disaster of some type never reopen.

One common disaster that’s typically covered by your homeowner’s or business insurance policies is fire. It’s not uncommon for those who fall victim to a devastating fire to learn that some objects they own such as high-priced jewelry or artwork may not be fully covered in the event that they become destroyed. Check your policy limits on these types of things, which may also include furs, silverware and various expensive collectibles like coins and stamps. If the coverage falls short of the appraised value of these items make sure you obtain an endorsement or rider to extend your coverage to higher amounts. An annual or bi-annual consultation with your insurance agent is always a good idea to keep your policies current.