Protecting Your Home: Understanding FEMA Flood Insurance and Its Importance

Introduction: Floods are the most destructive extreme weather event, causing an average of $5 billion in losses per year, according to the National Severe Storms Laboratory at NOAA. Unfortunately, a standard homeowners insurance policy does not cover flood damage, leaving homeowners vulnerable to financial ruin if their homes are breached by floodwaters. However, there are options available to protect your home against water damage. One of the most reliable options is FEMA Flood Insurance.

What is FEMA Flood Insurance? The National Flood Insurance Program (NFIP) is the largest provider of flood insurance coverage in the U.S. Created in 1968, the program is managed by the Federal Emergency Management Agency (FEMA) and works with nearly 50 insurance companies throughout the U.S. to sell and service its policies. You can only buy flood insurance through the NFIP if you live in a community that participates in the program, which typically requires enforcing various floodplain regulations aimed at risk mitigation.

Why is FEMA Flood Insurance Necessary? Many mortgage lenders require flood insurance on top of home insurance for as long as you have a mortgage. However, even if you’re allowed to drop the coverage, doing so is extremely risky. A single inch of floodwater can cause about $25,000 worth of property damage, according to FEMA. If your property experiences a major flood, you could be on the hook for a five- or six-figure repair bill. In a worst-case scenario, you’d need to pay for the full cost of repairing your home.

What Does FEMA Flood Insurance Cover? FEMA flood insurance purchased through the NFIP breaks down into two different types of coverage: Buildings and contents. You’ll usually need to purchase two individual policies with two separate deductibles to get both types of coverage. A standard FEMA flood policy provides up to $250,000 of building coverage and up to $100,000 of contents coverage.

Building Coverage:

• Electrical and plumbing systems
• Water heaters and furnaces
• Refrigerators, stoves, and built-in appliances
• Permanently installed flooring, carpets, panels, and cabinets
• Window blinds
• Foundations, staircases, and anchoring systems
• Detached garages
• Fuel tanks, well water tanks and pumps, and solar energy equipment

Contents Coverage:

• Clothing
• Furniture
• Electronic equipment
• Washer and dryer
• Carpets installed over wood floors
• Curtains
• Portable and window air conditioners
• Microwave
• Valuables (jewelry, artwork, furs, etc.) up to $2,500
• Merchandise and raw materials in storage for sale

What Does FEMA Flood Insurance Not Cover? FEMA flood insurance policies offered through the NFIP won’t pay out for damage to the following types of property:

• Fences