Flooding is unpredictable. It can happen at any time, anywhere. When floodwaters enter your home, they result in one of the most invasive types of property damage. Even seemingly harmless damage caused by a few inches of rising water can destroy your home and create hazardous conditions, including contamination by debris and pests. A flood can also produce structural damage to your home’s foundation, making the house unsafe and unlivable. For example, a partial collapse may occur, or the house may be lost entirely.

No matter the severity of the water damage, repairing and rebuilding your home costs a significant amount of money. Whether you own or rent a property in a high-risk flood area or a low- to moderate-risk area, you should consider how much flood insurance you need—not just the required amount. To ensure reimbursement when the worst happens, you want your coverage to equal the value of your home and possessions.

Flood Claim Reimbursement

When it comes to repairing or rebuilding some or all of your property, flood insurance should provide you with ample protection in case of damage or destruction to your home. You can obtain a standard flood insurance policy as either a replacement cost or actual cash value policy, up to the policy limit.

Replacement Cost Value

The replacement cost value is the cost to repair or replace an insured item of property that is damaged, without a deduction for wear and tear. For you to be eligible for the replacement cost value, you must meet three conditions:

• Your home must be a single-family dwelling

• Your home must be your primary residence at the time of loss, meaning you live there 80 percent of the year

• Your amount of flood insurance for building coverage is equal to 80 percent or more of the full replacement cost of your home, or the maximum amount of insurance available for the property under the NFIP

The replacement cost value is also available for residential condominium buildings. There is no required amount of coverage, but residential condominium buildings not insured to 80 percent of the replacement cost will experience a reduction in their claims payments.

Actual Cash Value

The actual cash value is the cost to repair or replace an insured possession of the property at the time of loss, less depreciation for wear and tear. The age and condition of the item determine the value of physical depreciation. Personal property, appliances, and carpeting are always adjusted at the actual cash value.

Purchasing Flood Insurance

Homeowners, condo owners, renters, and business owners are eligible to purchase flood insurance through the National Flood Insurance Program (NFIP) if your community participates in the program. Private flood insurance may also be available.

National Flood Insurance Program

Flood insurance offered by the National Flood Insurance Program (NFIP) will include replacement cost structure coverage if the above conditions are met. However, policies backed by the NFIP will only provide a maximum of $250,000 in building structure coverage and include debris removal, clean up, and damage to the furnace, water heater, air conditioner, and floor surfaces. Even if it costs more than that to rebuild a home, you will still only receive $250,000 maximum.

Personal property inside your home, such as furniture, clothing, and appliances, is not covered under the building structure coverage. However, coverage is available up to $100,000 for an additional premium.

Private Flood Insurance

If the NFIP’s maximum limits are not adequate for your property, private flood insurance is likely the better option. When shopping for flood insurance, remember that many policies also have individual limits on items within a specific category. Instead of focusing on the lump sum of coverage, consider how much you will need to protect your possessions by categorizing them.

Private carriers may also provide coverage for additional living expenses, which pays for extra costs like a hotel or apartment if your home is uninhabitable due to flooding.

Whether you have questions regarding flood claim reimbursement methods or need a flood insurance policy to protect your property from rising waters, National Flood Insurance can help. Don’t wait until it’s too late.