Flood Insurance

Flood insurance is a special type of insurance policy that is designed to protect a physical property against flooding damage. Flood policies are often connected to business property insurance or individual property insurance.

Do You Need a Flood Policy?

Many people assume that flood policies are already included in their existing property insurance, but this isn’t necessarily true. In fact, flooding is almost never included in either a commercial or homeowner’s policy. If your area does experience flooding fairly frequently (or the risk is present at all), you may want to invest in a flood policy to protect your physical property.

How Does a Flood Policy Work?

A flood policy will kick in if an actual flood occurs. This flood policy is paid for on a regular basis so that coverage is maintained. If a flood occurs while an individual or business is covered, the insurance policy will cover the damage associated up to the coverage cap. Floods can be very damaging, so these costs can be significant.

What Are Different Types of Flood Policy?

A flood policy may have different coverage caps depending on the type of coverage. For instance, it may cover $100,000 in real property damage, $20,000 in personal property damage, and have some additional coverages such as an allowance for housing while the property is being recovered. For commercial flood policies, business interruption may also be covered.

What Do Flood Policies Cover?

A flooding policy is separate from water damage. Water damage occurs when, for instance, plumbing bursts. While the room may “flood,” it’s not considered flooding. Flooding is only said to occur when it is a natural disaster situation in which a river overflows or rain builds up into flooding levels. A plumbing issue coming from a neighboring property would also not constitute flooding.

There are areas in which flooding is more common — and areas in which it is unheard of. You may want to determine whether you are in a flooding zone before you determine whether you need flood insurance.