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Flood Insurance: What Every Homeowner Needs To Know
Published  12/23/2010 | Home

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Did you know that most homeowners insurance policies do not offer protection against flood losses?

Standard homeowners policies will cover the damage a storm might cause to your home and possessions, but exclude damages from what is known as "rising water." Why? Insurance is essentially a device to spread risk, and few homeowners really need or would purchase this coverage. It is not feasible for a private insurance company to collect enough homeowners insurance to be able to afford to cover those who suffer the loss from flood. This would incrase the cost of flood insurance.

However, flood insurance is available through the federal government's National Flood Insurance Program and can be purchased through most licensed property and casualty insurance agents. The NFIP offers flood insurance to homeowners in participating communities across the country in an effort to make it affordable and available to as many homeowners as possible.

Flood insurance is available in communities that adopt and enforce ordinances that meet or exceed Federal Emergency Management Agency flood management standards. Currently, there are about 20,000 communities participating in the NFIP nationally.

In California, there are approximately 271,000 NFIP policies in effect in 521 communities. Administered by FEMA, the NFIP offers homeowners, renters and businesses flood coverage through 90 private insurance companies. Flood insurance may also be available outside of the NFIP partnership. For more information, homeowners should call their agents or brokers or visit

NFIP policies are typically limited to $250,000 for the structure and $100,000 for contents. Commercial buildings can be covered up to $500,000 for the structure, plus $500,000 for contents. Flood policies are also available to renters providing up to $100,000 for contents coverage.

On average nationwide, flood policies cost $544 annually while the average claim totals $33,000.

Flooding is defined by the NFIP as a temporary condition of water overflowing normally dry land from inland or tidal waters, or the unusually rapid accumulation of surface waters from any source, including rain. Mudflow – essentially, muddy water -- is covered by the NFIP.

Although floods and mudflow are covered by the NFIP, a landslide is not because it is a condition in which dry or damp earth or rock moves. Water does not directly contribute to the damage, even though a flood may trigger the slide.

Your insurance company will investigate the direct cause of the damage and determine if your homeowners or NFIP policy covers your loss from flood, mudflow or earth movement.

National Flood Insurance Program