Flood damage insurance is a pre-need product that protects the policyholder or beneficiary from the financial devastation caused by floods. Flooding can occur anywhere, from a variety of causes. Flood damage can cause thousands of dollars in repair and restoration costs. An inch of flood inside the typical American home can cause over $7000 in repairs and loss of property. With higher levels of floodwaters, the damage bill goes up significantly.



Most homeowners' insurances do not cover flood damage. Flood damage Insurance, like earthquake insurance, is considered a single insurance that is sold separately from homeowners insurance.

Flood damage insurance protects against damage and losses to buildings and their contents, but not the land surrounding them. The coverage applies whether the flooding is caused by heavy rainfall, coastal storms, snow or ice melt, dam failure, river or waterway overflow, or other causes. For insurance claims purposes, to be considered a flood the floodwaters must cover at least two acres or affect at least two properties.

Different types of flood damage Insurance policies are available, depending on the flood risk involved.

The standard policy for flood insurance is available for floodplains and areas identified in flood hazard maps as high-risk areas. Mortgage lenders do not generally approve loans unless the building in a high-risk area is protected by flood insurance. Insurance for buildings and its contents must be applied for separately.

Flood damage insurance is also available at low-to-moderate risk areas, often at a lower cost compared to a food insurance standard policy. With a preferred risk policy, both the home and its contents are covered.

Buildings built on low-to-moderate flood risk zones are better off with flood insurance, as most large floods extend beyond high-risk flood zones, and floods of varying sizes can occur at low-to-moderate risk zones as well. Over 25% of all flood damage insurance claims have come from low-to-moderate flood risk areas.

Flood insurance is sold by private insurers, and backed by the federal government. Even if private insurers sell flood insurance, it costs the same wherever it is purchased, because the United States National Flood Insurance Program sets the rates.

Flood insurance covers both businesses and homes. Under residential coverage, homeowners can avail of up to $250,000 to protect the home and up to $100,000 to protect its. Commercial flood damage insurance coverage is up to $500,000 for building insurance and up to 500,000 to protect its contents.

Homeowners located in a high-risk flood area are required by federally regulated or insured lenders to have flood insurance for the amount remaining on their mortgage, or $250,000, whichever is lower.

As with all insurance policies, there is a standard 30-day waiting period, from the date of purchase, before a new policy comes to effect. The 30-day waiting period does not apply if the initial purchase of flood insurance occurs within one year of a map change, or if the initial purchase of flood insurance is in accordance with a new, renewal, or extension of a loan within a high-risk flood zone with a federally regulated lender.