We hear this question frequently, especially from our charter school clients here in Las Vegas.   Flood coverage encompasses much more than just a standard flood. For example, flood coverage will include water that backs up through a sewer or drain (which is quite common here in Las Vegas after large rainstorms).

This is why we wanted to explain precisely what flood coverage is, what it covers, and your options for purchasing the coverage. 

Did you know?

• Six out of every ten declared disasters involve flooding.

• About 25 percent of all flood claims happen in “low to moderate” risk areas.

• Floods are the nation’s #1 natural disaster.

• Homes in areas with new construction or other events, such as forest fires, are more susceptible to floods because of the changes to the land around them.

What is Considered a Flood?

While we most often think of floods as large overflowing rivers that inundate towns, insurance companies define a flood as the following:

• Flood, surface water, waves, or tidal water.
• Water that backs up through sewers or drains or overflows or is discharged from a pump.
• Water below the ground surface, including water that exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool, or other structure.

Insurance Coverage Options:

There are a few options for purchasing flood insurance.

1. National Flood Insurance Program (NFIP). This is the most recognized way of purchasing flood insurance, and the Federal Government has partnered with select insurance companies to provide the coverage. 

Here is how it works:  While the policy is purchased through a private insurance company, the Federal Government determines the limits and premiums they can charge.   And, in the event of a claim, the Government reimburses the insurance companies for the paid claims.

Items to Note:

• The NFIP limits coverage to $250,000 in-building coverage and $100,000 in contents coverage.   
• The deductible is typically a set amount. (i.e. $500 or $1,000)
• Contents in a basement are not covered.
• Rental properties cannot be covered.
• Contents are insured at “Actual Cash Value” rather than “Replacement Cost.” (This means you will be reimbursed at the depreciated value rather than the cost to replace it.) 

 2. Private Insurance Companies. Several insurance companies have put together programs with enhanced coverages over those offered through NFIP. 

The upside is that you have greater control over the coverages you want. The downside is a higher premium associated with purchasing this type of policy.

Items to Note:

• You can purchase building and contents limits for whatever amount you would like.
• A deductible is either a set amount or percentage of the dwelling (i.e., $1,000 or 5% of the dwelling)
• Coverage for contents in a basement can be purchased.
• Contents can be insured at “Replacement Cost.”
• Rental Property coverage can be included.

3. Your Current Homeowner’s Policy. Your current homeowner’s policy will often allow you to purchase some minimal flood coverage. The coverage is usually limited to just backup of sewers and drains, and the coverage will only be for a set amount (.i.e., $10,000).