Does your home insurance policy cover hurricane-related flood damage?

If flooding damages your home during a hurricane like Hurricane Sandy, does your home insurance pay for the damage? Unfortunately, the answer is no.

Standard home insurance policies do not cover damage from flooding from heavy rain or storm surge.

“Insurers continue to broaden their property policy exclusions to avoid paying for anything that can remotely be considered flooding,” says United Policyholders, an advocacy and education group for insurance consumers.

hurricane-flood-insuranceFor your home to be covered for flood damage, you need to have separate flood insurance coverage, which typically is purchased through the National Flood Insurance Program.

“People tend to underestimate the risk of flooding,” Jeanne Salvatore, a spokeswoman for the Insurance Information Institute, said in a statement in 2011. “But, in fact, 90 percent of all natural disasters in this country involve flooding.”

A 2011 poll by the Insurance Information Institute found that only 14 percent of American homeowners carried flood insurance. Keep in mind that there’s a 30-day waiting period for flood insurance to take effect. People who decide to buy flood insurance right after a hurricane watch or warning pops up are out of luck, as insurers won’t sell coverage after a watch or warning is posted in your area.

Sam Miller, executive vice president at the Florida Insurance Council, said in 2011: “People who scramble for insurance when a storm is bearing down will not be able to find it.”

Policies purchased through the National Flood Insurance Program (NFIP) provide coverage for up to $250,000 for your home’s structure and $100,000 for your personal possessions, according to the Insurance Information Institute. These policies offer replacement cost coverage for home’s structure, but only actual cash value coverage for your possessions.

Replacement cost coverage pays to rebuild your home as it was before the damage, the institute says. Actual cash value is replacement cost coverage minus depreciation; the older your possessions are, the less money you’ll get if they’re damaged.

The Federal Emergency Management Agency (FEMA), which runs the flood insurance program, says people in areas at low risk of flooding file more than one-fifth of NFIP claims. “A low risk from flooding does not mean there is no risk,” Salvatore says.

The average flood insurance premium costs about $600 a year, according to FEMA. Just 3 inches of floodwater in a home will require repairs costing an estimated $22,590, FEMA says.

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