15:42 PM

Flood insurance and homeowners insurance – know the key differences


Flooding is a real threat far beyond those who live near a coast and it’s important to understand the insurance coverage you need to pay for damage caused by it.

As the spring thaw gets underway and heavy rain storms begin hitting many parts of the country, flooding becomes a concern for many homeowners.

The simple truth: flooding is a real threat far beyond those who live near a coast and it’s important to understand the insurance coverage you need to pay for damage caused by it.

The National Flood Insurance Program (NFIP) defines a flood as a general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by rising or overflowing water or mudflow.

Ninety percent of all natural disasters in the U.S. involve flooding, according to the Government Accountability Office. Floods and flash floods happen in all 50 states.

Other causes of flooding include hurricanes, winter storms and snow melt.

More than 40 percent of homeowners mistakenly think that standard homeowners insurance covers flood damage caused by heavy rain, according to the Insurance Information Institute (I.I.I.).

What’s covered, what’s not

Standard homeowners and renters insurance covers damage caused from a variety of severe weather events, including hail, ice storm, tornadoes and strong winds, including winds from a hurricane.

Flood damage, however, is not covered by homeowners insurance, but coverage is available in the form of a separate policy from the federal government’s NFIP and a few private insurers. Source: I.I.I. 2016 Consumer Insurance Survey

The only qualification for the NFIP is that property owners must live in a community that participates in the program. You can check with your local government officials to find that out. The federal government requires flood insurance as a part of mortgages for houses in flood-prone areas. You might be eligible for a reduced rate if the community you live in has agreed to certain zoning regulations.

You can apply for federal flood insurance through insurance companies like American Family that participate in the NFIP in sales and claim-adjusting capacities on behalf of the federal government.

The NFIP provides coverage for up to $250,000 for the structure of the home and $100,000 for personal possessions and $500,000 each for building and contents of commercial properties. If you need flood insurance in excess of the NFIP’s limits, ask your insurance agent about specialized policies to provide excess coverage. There are also contents-only policies available for renters.

There are also private insurers that offer private flood insurance that is not associated with the National Flood Insurance Program. American Family agents are able to access these type of policies for customers to try to obtain coverage.

According to the I.I.I.’s May 2016 Consumer Insurance Survey, nationally only 12 percent of homeowners had flood insurance, the lowest number since 2010 and down from 14 percent in 2015. In addition, the number of people buying NFIP policies nationwide has plunged by 549,000—almost 10 percent—since 2009, even as coastal development surges and sea levels rise.

It’s also important to note, “Back-up of Sewer and Sump Pump Overflow” endorsements, that some property owners purchase, only cover damage caused by sewage or wastewater (effluent) that backs up through sewers or water that overflows from sump pumps. But if those occurrences are caused by flooding, coverage is excluded under the endorsement.

Plan ahead

Generally, there is a 30-day waiting period for flood insurance to become effective once the full premium has been paid. The waiting period is waived, however, when obtaining, increasing, extending or renewing a federally backed loan for a property. In cases where a property has been reclassified as high-risk due to a revision in the Flood Insurance Rate Map (where it is now in a floodplain where before it was not), the waiting period is only one day.

Options for those without flood insurance

For homeowners impacted by flooding who did not purchase flood insurance, disaster assistance may be available through grants from the Federal Emergency Management Agency (FEMA) to help pay for temporary housing, emergency home repairs, uninsured and underinsured personal property losses and medical, dental and funeral expenses associated with the disaster. Residents who were affected can apply for assistance online at or call 800-621-3362 or (TTY) 800-462-7585, 7 a.m. to 10 p.m. seven days a week.