Heavy rainstorms and the remnants of hurricanes have caused serious flooding across the Hudson Valley and the New York metro area in recent years, including in neighborhoods that were never considered flood-prone. Yet many homeowners don’t realize that their homeowners policy almost certainly does not cover flood damage.
What your homeowners policy does and doesn’t cover
A standard homeowners policy typically covers wind damage and certain kinds of water damage, such as a burst pipe or a leaking roof. It generally does not cover damage from a flood: water from a river or stream that overflows its banks, storm surge, or heavy rain that overwhelms drainage and flows into your home. Renters policies have the same gap. To be protected, you need a separate flood insurance policy.
Four questions to ask
- Is it available to me? Flood insurance is not limited to beachfront or riverfront properties. Policies through the National Flood Insurance Program (NFIP), run by FEMA, are available in participating communities, which include most of the country. Private flood insurance is also available and may offer higher coverage limits.
- Do I need it? If you live in a high-risk flood zone and have a federally backed mortgage, flood insurance is required. Outside those zones it’s optional, but a significant share of flood claims come from properties outside high-risk areas. It pays to check your property’s actual risk rather than relying on a flood map alone.
- What does it cover? NFIP policies cover the building and, if you buy it, your belongings, up to set limits. Coverage for basements, finished spaces, and temporary living expenses is limited, so read the policy carefully.
- How much does it cost? Premiums vary widely depending on your home’s location, elevation, construction, and replacement cost. Under FEMA’s current pricing approach, known as Risk Rating 2.0, each property is rated on its own risk, and by law most policyholders’ rates can’t increase by more than 18% a year.
Don’t wait for the forecast
New NFIP policies generally don’t take effect until 30 days after purchase, so you can’t wait until a storm is on the way to buy coverage. If you already have a policy, review your limits and deductible each year to make sure they still fit your home’s value. If you are considering coverage for the first time, compare NFIP and private options with your insurance agent, and visit FloodSmart.gov, FEMA’s consumer site, for more information.
Flood insurance is one piece of protecting your home and your finances. For more on preparing for the unexpected, see Smart Financial Strategies for Unexpected Events.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
