Flood Gap Insurance: Protecting Your Home

Flood gap insurance refers to the gap between insured and uninsured losses in the event of a flood. Flood insurance is typically a separate policy from homeowners or tenants insurance and is often provided by the government through the National Flood Insurance Program (NFIP). This type of insurance covers damage to the structure of a home and personal belongings in the event of flooding caused by heavy rain, overflowing bodies of water, or rapid snowmelt. While it is not mandatory for everyone, those living in Special Flood Hazard Areas (SFHAs) with a mortgage are required by federal law to have flood insurance. The cost of flood insurance varies depending on factors such as risk level and location, but it can provide valuable protection against financial losses due to flood damage.

What does flood insurance cover?

In the United States, the National Flood Insurance Program (NFIP) provides flood insurance to help reduce the socio-economic impact of floods. The NFIP is managed by the Federal Emergency Management Agency (FEMA) and is delivered to the public by a network of more than 50 insurance companies and the NFIP Direct. Flood insurance is available to anyone living in one of the almost 23,000 participating NFIP communities.

The NFIP offers two types of coverage: building coverage and contents coverage. Building coverage protects electrical and plumbing systems, furnaces and water heaters, refrigerators, cooking stoves, and built-in appliances like dishwashers. It also covers permanently installed carpeting, cabinets, paneling, and bookcases, as well as foundation walls, anchorage systems, and staircases. Building coverage also includes fuel tanks, well water tanks and pumps, and solar energy equipment.

Contents coverage, on the other hand, protects personal belongings such as clothing, furniture, and electronic equipment, as well as portable and window air conditioners. It also covers carpets not included in building coverage, such as carpets installed over wood floors. Contents coverage also includes valuable items such as original artwork and furs, with a limit of up to $2,500.

It is important to note that flood insurance does not cover all types of losses or damage. For example, temporary housing and additional living expenses incurred during building repairs are not covered. Property outside of the insured building, such as landscaping, decks, and fences, is also not covered. Financial losses caused by business interruption, currency, precious metals, and stock certificates are also excluded from coverage. Additionally, cars and most self-propelled vehicles, as well as personal property kept in basements, are not typically covered by flood insurance.

The coverage and exclusions mentioned above may vary depending on the specific insurance provider and policy. It is always advisable to carefully review the terms and conditions of your flood insurance policy and clarify any doubts with your insurance agent or provider.

What doesn't it cover?

It is important to note that flood insurance does not cover all types of losses or damage. Here are some key points about what is typically not covered by flood insurance:

• Temporary Housing and Additional Living Expenses: Flood insurance does not cover temporary housing costs or additional living expenses incurred while the insured building is being repaired or is uninhabitable.
• Property Outside the Insured Building: Any property outside the insured structure, such as landscaping, wells, septic systems, decks, patios, fences, seawalls, hot tubs, and swimming pools, is generally not covered.
• Financial Losses Due to Business Interruption: Flood insurance does not provide coverage for financial losses caused by interruptions to business operations.
• Currency, Precious Metals, and Valuable Papers: Items such as currency, precious metals, stock certificates, and other valuable papers are typically excluded from flood insurance coverage.
• Vehicles and Self-Propelled Vehicles: Cars, most self-propelled vehicles, and their parts are not covered by flood insurance.
• Personal Property in Basements: Flood insurance does not cover personal belongings kept in basements. It is important to note that this exclusion may vary depending on the insurance provider and the specific policy.
• Sewer Backup (Indirectly Caused by Flooding): If a sewer backup is not directly caused by flooding, the resulting damage is not covered by flood insurance.
• High-Value Items: Standard flood insurance policies may have limited coverage for high-value items such as original artwork and furs. There may be caps on the amount covered for these items, so it is important to review your policy carefully.
• Limits on Coverage Amounts: The maximum coverage provided by the National Flood Insurance Program (NFIP) is $250,000 for flood damage to a home and $100,000 for damage to personal property. If your home or belongings are worth more, you may need to consider additional coverage options.

Who needs it?

Flood insurance is a separate policy from standard homeowners insurance and is available to anyone living in one of the almost 23,000 participating communities in the National Flood Insurance Program (NFIP). It is designed to cover direct physical losses to your structure and belongings in the event of a flood.

The NFIP provides flood insurance to property owners, renters, and businesses, and while it is not mandatory to have flood insurance, it is highly recommended for those living in high-risk flood areas. Homes and businesses in high-risk flood areas with mortgages from government-backed lenders are required to have flood insurance.

Even a small amount of flooding can result in costly damage, with just one inch of floodwater causing up to $25,000 in damage. Flood insurance can help protect against these expenses, covering the cost of repairing the structure of your home and replacing damaged personal belongings.

If you own property in a Special Flood Hazard Area (SFHA), there is at least a one percent chance of flooding in any given year, and federal law typically requires you to have flood insurance if you have a mortgage. However, even if you are not required to purchase flood insurance, your home may still be at risk of flooding due to factors such as the shape of the surrounding land, the type of soil, and weather patterns.

Therefore, anyone living in a flood-prone area or an area with a history of flooding should strongly consider purchasing flood insurance to protect their financial assets and aid in faster recovery after a flood.

How much does it cost?

The average cost of flood insurance is $819 per year, according to a NerdWallet analysis. However, this figure can vary significantly depending on various factors, such as location, elevation, home characteristics, and the cost to rebuild.

The National Flood Insurance Program (NFIP), managed by the Federal Emergency Management Agency (FEMA), provides flood insurance to property owners, renters, and businesses. The average cost of an NFIP policy is $859 per year, according to Forbes Advisor's analysis. This policy provides up to $250,000 of dwelling coverage and up to $100,000 for contents coverage. The cheapest state for flood insurance is Nevada, with an average cost of $593 per year, while the most expensive state is Connecticut, with an average cost of $1,491 per year.

According to the Federal Emergency Management Agency (FEMA), the average homeowners flood insurance premium is approximately $700 per year. Premiums for flood insurance will vary depending on your risk level for a flood loss, the amount of coverage you choose, the type of coverage you need, and your deductible.

In addition to the NFIP, private flood insurance companies also offer coverage, which can be more comprehensive and provide higher coverage limits. Private flood insurance may be available as a base policy or an excess policy, which provides supplemental coverage on top of an NFIP policy.

The cost of flood insurance is an important consideration for homeowners, especially those in high-risk flood zones or areas with a history of flooding. It is worth noting that standard homeowners insurance policies typically do not cover flood damage, so separate flood insurance coverage may be necessary to protect against financial losses due to flooding.

How do you get it?

Flood insurance is available to anyone living in one of the almost 23,000 communities participating in the National Flood Insurance Program (NFIP). To purchase flood insurance, call your insurance company or insurance agent—the same person who sells your home or auto insurance. If you need help finding a provider, go to FloodSmart.gov/flood-insurance-provider or call the NFIP at 877-336-2627.

You can also purchase flood insurance through GEICO, which has flood specialists who will work with you to make sure you have (and understand) the right kind of policy for your situation. You can reach them at (800) 841-3005.

Flood insurance is also available through FEMA's Group Flood Insurance Policy (GFIP). GFIPs are provided to individuals and households that don't have flood insurance and have experienced flood damage resulting from a Presidentially declared major disaster. FEMA may pay up to $2400 in premiums as part of a disaster assistance grant, for up to three years of coverage for eligible recipients' flood-damaged property. To find out more about GFIPs, contact NFIP Direct at www.nfipdirect.fema.gov or 1-800-638-6620.

It's important to plan ahead when purchasing flood insurance, as there is typically a 30-day waiting period for a policy to go into effect. Exceptions are made if coverage is mandated, purchased as required by a federally backed lender, or related to a community flood map change.

Frequently asked questions