10/31/2012
Here's what flood insurance pays out for each type of property covered:
Contents. Flood insurance pays actual cash value (not the most generous amount -- it means the cost to replace the damaged or lost property based on its actual, depreciated value as used goods).
Property. You can opt for replacement cost coverage (the cost to replace the damaged or lost property with new property, without regard to depreciation) if you're insuring a single-family home that is your primary residence. Available coverage is at least 80% of the full replacement cost of the building (an amount that's set in advance for your property) or the maximum available under the NFIP.
Know What Flood Insurance Doesn't Cover
A good flood insurance policy can be a financial lifeboat following a destructive event such as a hurricane. But flood insurance doesn't cover everything. Before buying, you should know about the following key restrictions and limitations, which are specific to flood insurance.
Water Must Have Come From Outside Your Home
If something breaks or malfunctions inside your home -- for instance, pipes freeze and burst or a toilet overflows -- and this leads to flooding, your flood insurance policy won't apply. However, your homeowners' policy should cover these types of losses. Ask your agent or broker to give you the lowdown.
Swimming Pools and Landscaping Aren't Covered
If something goes wrong with a swimming pool on your property and this causes your home to sustain flood damage, your flood insurance policy won't apply. Also, don't expect any reimbursement for flood damage to flower beds, vegetable gardens, trees, or other landscaping on your property.
Small Floods Don't Count
To be considered a flood, the water that causes damage must have covered at least two acres or have affected at least one other property. Also, if your home sustains any mold or mildew damage that you could have prevented from occurring, your policy won't cover such damage.
Living Expenses or Business Interruption Aren't Covered
Your flood insurance policy won't pay you for any living expenses you may incur (such as renting a hotel room until your property is fixed). Also, you won't recover any financial losses caused by business interruption (if you operated a business out of your home) or any other loss of your home's use.
Money and Important Papers Aren't Covered
Your policy won't pay for the value of any currency, precious metals, stock certificates, and other valuable papers that get destroyed in a flood.
Improvements and Most Contents in Below-Ground Areas Aren't Covered
Your flood insurance policy won't cover any improvements you've made to your basement, such as finished walls or floors. Also, almost all personal property (including clothing, computers and electronic equipment, kitchen and office supplies, and furniture) located in basements or other areas of your home below the lowest elevated floor aren't covered.
