If you’re buying property in an area with a high risk of flooding, known as a Special Flood Hazard Area, you’ll likely need flood insurance to qualify for a mortgage. But even if you live outside these high-risk zones, flood insurance can still be a smart purchase.
Flooding can happen almost anywhere. According to the Texas Department of Insurance, about 40% of flood claims occur outside designated high-risk areas. Unexpected events like damaged drainage systems, broken water mains, or failed river levees can lead to costly flooding where you might not expect it.
A standard home, renter, or business insurance policy usually doesn’t cover flood damage. Without flood insurance, you could face significant out-of-pocket costs to repair your home and replace belongings or business equipment. Even if you're renting a home or apartment and don't own it, flood insurance can protect your personal property, such as furniture, electronics, clothing, from flood damage. For business owners, flooding can disrupt operations and damage inventory or equipment. A flood policy helps safeguard your investment and keep your business running.
The National Flood Insurance Program
Flood insurance is widely available through the National Flood Insurance Program (NFIP).
There are, however, limits to federal flood insurance. For commercial structures, for example, the NFIP maximum is $500,000 for the building and $500,000 for the contents. Even small businesses may need supplemental coverage. Flood insurance policies also don't cover flood damage to vehicles, even if they are parked at a property with a flood policy. You'll need an auto policy with comprehensive coverage for flood damage to be covered.
When your coverage starts
Your NFIP policy starts covering your building 30 days after the policy is written, unless the policy is required for a mortgage.
If you have a policy from a surplus line insurer, your coverage usually starts immediately.
Tips on flood cleanup and insurance claims
- Don't drive on flooded roads.
- Check for damage before entering your home or business. Flood-damaged buildings can collapse. Be careful of gas leaks or electrical wires in flooded basements.
- If you have damage, call your insurer or agent.
- Take photos or videos. Make a list of lost or damaged items.
- Even if you didn't have flood insurance, you may qualify for money from the federal government.
- Talk to your insurer before making permanent repairs or throwing away damaged property.
- Save receipts from anything you buy to help deal with damage, such as sandbags or pumps. Your insurer might pay you back.
- If you have to move, make sure your insurer or agent can contact you.
- Save receipts for temporary repairs, temporary housing, food, etc.
Tips for filing a commercial flood insurance claim
Commercial flood claims are also handled through the National Flood Insurance Program. Follow these steps to file your claim:
- Report the loss as soon as possible. Start your claim with an agent as soon as it's safe to do so.
- Document everything. Take extensive photos and videos, note high-water marks, list out all your damaged business property, save samples, and get estimates from contractors.
- Contact your adjuster. An official adjuster will inspect the damage, explain your coverage, and help you prepare a "proof of loss" form.
- Submit your proof of loss. This is a sworn statement that must be filed within 60 days (some extensions are possible) of your loss.
- Understand your coverage. NFIP covers direct physical loss from flooding, but not mold/mildew or backup from sewers unless you purchase specific endorsements with your policy.
- Know your rights. An adjuster will assess damage and help with your claim, but it's up to the insurance company to approve or deny the claim. If you have immediate recovery needs, you can ask your adjuster about an advance. If you're denied or underpaid, you can file an appeal.
Find a complete list of what's covered and not covered under commercial flood insurance policies.