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Does Flood Insurance Cover Contents?

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Flood insurance can be purchased as an endorsement on a homeowners insurance policy as it’s not automatically included. This includes coverage for structural damage and personal property caused by floods. FEMA spearheads the National Flood Insurance Program (NFIP) that provides flood insurance coverage to all homeowners in the United States. This is the largest insurance program underwritten by the Federal government. It can be purchased directly from FEMA or through a third-party insurance company. If you’re on the market for flood insurance, this guide will highlight what it covers and how you can protect your property.

Does flood insurance cover contents? Yes, flood insurance covers contents up to $100,000 in value. According to NFIP, contents are all personal property in the home such as clothing, furniture, electronics, and other personal property. This coverage is separate from building coverage that has a higher limit. Homeowners can choose the level of coverage needed for contents and it can be as low as $10,000 and as high as $100,000 through the official Federal insurance program. If you purchase private insurance you can raise the limits further, especially if you have high-value items you want to insure.

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Flood Insurance: What Is Contents Coverage

The Federal flood insurance program called NFIP offers two levels of coverage: building coverage and contents coverage. Building coverage is essentially structural coverage for the home and includes things like the walls, roofs, foundation, and insulation. Contents coverage is coverage for all personal property inside the home. 

Contents coverage is not only available to homeowners but renters as well. You can purchase contents coverage through your current home insurance or directly from FEMA, to make sure your items are protected during a storm. NFIP’s contents coverage extends to items such as:

  • Clothing – All clothing in the home including jeans, t-shirts, hoodies, suits, dresses, jackets, etc., will be covered.
  • Appliances – Fridges, washers, dryers, microwaves, stoves, and all other appliances.
  • HVAC Systems – All air conditioners in the home will be covered, including portable ones.
  • Carpets – If the carpets are installed over wooden floors and not included in-building coverage, they’ll be covered by contents coverage.
  • Valuable Items – This includes items such as instruments, artwork, designer clothes, etc., up to $2,500 apiece.

Property coverage is fundamentally different from dwelling coverage but you get dual coverage when you purchase NFIP coverage. The average homeowners insurance policy will insure you for the same things, but the main difference is that it won’t insure you for flood damage unless you specifically purchase this policy. If you live in a high-risk area, you should definitely have coverage for all personal property in your home.

Things That Are Not Covered By Flood Insurance

The NFIP flood insurance relief plan provides excellent coverage for all flood-related claims, but there are certain things that won’t be covered by this program. This is why you must have a regular home insurance policy to fill in the gaps and make sure your home is protected on all fronts. The following are things that fall outside the scope of NFIP flood coverage:

  • Mold Damage – Mold can set in hours after a water leak because it’s bacteria that grows on moist surfaces. If you have mold damage in your home, the removal procedure will not be covered by flood insurance.
  • Cash/Precious Metals – If you have cash savings, jewelry, and other valuables like gold bars in your home you won’t be covered by flood insurance. You can alternatively schedule these items as separate items and insure them at a small premium increase. This is the only way to avoid the $2,500 sub-limit imposed on valuable items.
  • Outdoor Belongings – Flood insurance won’t cover you for property outside the main dwelling. This includes structures such as the deck, fence, patio, well, sewer system, pool, and even landscaping. You’ll have a certain % of your main dwelling coverage allocated for secondary structures on your property for this purpose.
  • Loss Of Use – If your home is flooded in a hurricane and you have to move out until it’s drained and repaired, the living costs won’t be covered by flood insurance. Your homeowners insurance policy will likely have “loss of use” coverage that you can use to pay your rent, bills, and other living expenses while you’re removed from home.
  • Vehicles – If your vehicle was flooded in the storm (most vehicles are declared a total loss with water damage), you won’t be covered by flood insurance. Even car insurance won’t cover a flooded car unless you have comprehensive insurance. Check your car insurance policy to make sure you’re covered for a total loss event.

There are certain coverage nuances for items that are expensive and difficult to replace. For instance, the furnace can cost more than $8,000 to replace as it’s the most important heating device in the home. Flood insurance usually provides limited coverage for the basement (and its contents), but items like the furnace will be covered under building coverage despite being personal property. Other appliances such as the washer and dryer will be covered under personal property. If you had items like food in the basement, they likely won’t be covered.

Pro Tip: Consult your agent to learn about the coverage details and limitations of your flood insurance policy. The purpose here is to double-check and make sure that every bit of personal property in your home is insured.

Flood Payments: ACV Vs. RCV

There are two ways flood insurance programs like NFIP pay out customers: Actual cash value and replacement cost value. Most policies have an actual cash value unless you specifically upgrade to replacement cost value. We’re going to outline the difference below

Replacement Cost Value (RCV)

Replacement cost is the original cost you paid for the items in your household, without depreciation. Replacement cost value insurance has higher premiums and to qualify you must meet the following criteria:

  • Must live in a single-family building.
  • Must be your primary residence, which means you must be spending more than 183 days a year in that building.
  • Must have at least 80% building coverage from the total replacement value of the building should it be destroyed

Actual Cash Value (ACV)

Actual cash value represents the current market value of your personal property. Most personal property in the home such as appliances and electronics are estimated based on ACV. If you purchased a TV for $1,000 and now that same TV is worth $700, you only get paid $700. Most consumer items lose between 10-15% of their value each year. The insurance company processes each item for depreciation at the time of the claim application.

How To Buy Flood Insurance

If you want to buy flood insurance, you can consult your insurance agent for a flood insurance endorsement. Alternatively, you can purchase flood insurance from FEMA’s program – NFIP. Flood insurance is not cheap and can cost over $1,000 per year, depending on the size of your home and the risk factor on the insurer. 

If you live in a high-risk zone you’ll likely pay more than $1,000/year. Note that you’re not automatically insured if you purchase flood insurance. Programs like NFIP take 30 days to be activated which means if a storm comes 3 weeks after the purchase, it’s the same as not being insured at all. Make sure you apply early prior to the Hurricane season (June-November) to be safe.

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