Flood Insurance: The Basics Everyone Should Know

In the world of home insurance, floods are quite a contentious topic. A home is not protected against flooding, not even with a home insurance policy. Flood insurance exists, but it operates completely separate from home insurance.

Since flood insurance primarily protects the home from damage that occurs as a result of a flood, it would seem natural for floods to be covered by a standard home insurance policy, but they are not.

Another problem with this division in insurance is that it is not common knowledge. Because the combination of the two types of insurance seems so highly anticipated, many people are unaware that their home insurance does not, in fact, cover flood damage. They only find out when they file a claim for flood damage and are denied it because their policy doesn’t cover such claims.

From the perspective of insurance companies, floods can be extremely costly, and the damage is often extensive and difficult to repair. Obviously, this is also a problem for the customer who has to pay for these damages out of pocket.

Another problem for insurance companies is that floods are both seasonal and regional, but to a greater extent than other natural disasters. Some regions flood annually while others flood sporadically. But almost all regions have the opportunity to receive the full force of a powerful flood.

Only some regions are prepared for these dramatic events in terms of the structural integrity of the home and the preparedness of the residents for such a disaster.

Different regions of the United States have their rainy seasons at different times, and even parts of the country that are known for their good weather have extreme rain spikes they are not prepared for.

However, there is a government program called the National Flood Insurance Program that works as part of FEMA. The NFIP provides a basic but fairly comprehensive form of flood insurance. And for certain regions where floods are particularly frequent and especially powerful, flood insurance is required.

After Hurricane Katrina actually devastated parts of the South, namely Louisiana, flood insurance became more important but also more expensive because of all the damage that was done.

But at the end of May 2012, the authorization for the National Flood Insurance Program expires and is pending renewal in Congress. Unfortunately, due to current political tensions, this program may not be renewed. For some people, it is considered an additional and superfluous cost.

In 2005, the NFIP increased massive costs due to the debris caused by Katrina and its aftermath. And now that every part of the country’s budget and every expenditure is being scrutinized, every government program is under a microscope and its need is being questioned.

But when floods are a constant problem and have the potential to cause horrible damage, a government program to help clean up the debris and help people recover seems like a pretty necessary concept.