Is flood damage covered by homeowners insurance?
To put it simply, flood damage, by itself, is usually not covered by your typical homeowners insurance policy.
Flood, as a standalone peril, is typically excluded in fire, named perils, and broad form homeowners policies because it is considered to have the potential for catastrophic loss and adverse selection. Only those most at risk of flood would buy flood insurance, which would negate the law of large numbers used by insurers to manage risk. Insurance companies would also run the risk needing to pay out huge sums if a flood were to happen in an area where they have a high concentration of clients. This actually became the subject of a legal battle in Louisiana after Hurricane Katrina damaged tens of thousands of homes and businesses. Flood was excluded in the insurance policies but if the insurers had to pay, they would have had to pay billions (see Does Homeowners Insurance Cover Natural Disasters? to learn more). Needless to say, very few companies would have the cash on hand to take a hit like that and remain solvent.
That said, there are still two common ways to insure against flood:
- Resultant Damage: If flood is the result of an insured peril, it would be covered automatically.
- Endorsement: Some insurers will offer a flood endorsement or a private contract for an additional cost. However, they may restrict the definition of flood in the policy terms.
More Q&As from our experts
- Does my company need cyber insurance?
- Does home insurance cover snow damage?
- Can I get a discount on my car insurance if I have winter tires?
Stay informed with Insuranceopedia!
The world of insurance can be complicated. Subscribe to the Insuranceopedia newsletter and stay in the know! Access expert content, industry term definitions and answers to your questions from knowledgeable insurance insiders. Arm yourself with what you need to know to keep your assets and your family safe.
- Free Life Insurance Quoter Tool: Get a life insurance quote online in minutes with Insuranceopedia and no hassles.
- Get a Life Insurance Quote with Insuranceopedia
- Get a life insurance quote online in minutes with Insuranceopedia's Free Life Insurance Quoter
- Win $100 Amazon Gift Card by taking our short reader survey!
- Win $100 Amazon Gift Card by taking our 2-minute Reader Survey