Homeowner's insurance policies do not include coverage for floods because these are part of a separate program. The federal government underwrites all flood insurance policies through the National Flood Insurance Program. Individuals may purchase NFIP insurance through private insurance companies in participating areas. Flood insurance covers specific types of losses for the home and its contents.
The main portion of flood insurance covers the physical building itself, including the foundation. In addition to the basic structure, building coverage also pays to replace the electrical system, plumbing system and major appliances, including air conditioners, heaters, water heaters, refrigerators, stoves and dishwashers. Permanently installed items are also covered as part of the building. These include wall-to-wall carpeting, blinds, and cabinets and bookshelves built into the walls. Property owners may purchase up to $250,000 of coverage for a residential building. Property owners in high-risk areas may purchase coverage for the building without getting any coverage for the contents. In low-risk areas, building coverage automatically includes the contents as well.
Flood insurance for personal property pays the actual cash value of the home's contents damaged or destroyed by a flood. This includes clothing, household goods and electronics. Personal property flood insurance also covers appliances, including clothes washers and dryers, microwaves, freezers, portable heaters and portable air conditioners. Personal property coverage is limited to the replacement value of items, up to the policy limit, which is as much as $100,000. However, the policy covers only $2,500 for high-cost items, such as paintings. Anyone living in a residential property may purchase coverage for personal property only, which allows renters to cover their belongings without having to pay for flood insurance for the building as well.
Basements are handled differently from the rest of the property because their floors are below ground level. This makes them more likely to be flooded, which is why the NFIP limits coverage. Building coverage for basements pays to replace the basic structure, including the insulation, drywall, and the basic electrical, HVAC and water systems located in the basement. The personal property coverage is strictly limited in the basement, extending only to washers and dryers, freezers and portable air conditioners. All other household goods, including furniture and electronics, are not covered if they are in the basement.
The coverage for commercial properties is slightly different from residential ones. Although the types of losses covered are the same, the maximum coverage available is different. With a commercial property, building owners may purchase up to $500,000 of flood insurance coverage for the building and up to $500,000 for the contents. Regardless of whether the building is in a high-risk or low-risk area, the owner may purchase coverage for the building without including coverage for the contents. Renters in commercial buildings may also purchase flood insurance coverage for items in the building, up to $500,000.
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