Here's something that catches most homeowners off guard: your regular homeowners insurance doesn't cover flood damage. Not even a little bit. When water comes in from outside—whether it's from a hurricane, heavy rain, or an overflowing river—you're on your own unless you have a separate flood insurance policy. And when I say "on your own," I mean potentially facing tens or hundreds of thousands of dollars in damage with no financial protection.
But here's the tricky part: even when you buy flood insurance, the coverage isn't as straightforward as you might expect. There are two distinct types of coverage—building and contents—and significant limitations on what's actually protected. Let's break down exactly what flood insurance covers (and what it doesn't) so you can make informed decisions about protecting your home and belongings.
Building Coverage: Protecting Your Home's Structure
Building coverage protects the physical structure of your home and the systems that make it livable. Under the National Flood Insurance Program (NFIP), you can get up to $250,000 in building coverage for a residential property. This includes your foundation, walls, roof, and essential systems.
What exactly counts as "building" coverage? Your electrical and plumbing systems, furnace and water heater, refrigerators, cooking stoves, and built-in appliances like dishwashers are all covered. Permanently installed items like carpeting, cabinets, paneling, and bookcases are also included. Basically, if it's attached to your house and would stay there if you moved, it's probably covered under building coverage.
One important note: the $250,000 limit might sound like a lot, but if your home is worth more than that—which is increasingly common in today's real estate market—you'll need to purchase excess flood coverage from a private insurer to fully protect your investment. Don't assume the NFIP coverage alone will be enough to rebuild if disaster strikes.
Contents Coverage: Protecting Your Belongings
This is where things get interesting—and where many people discover gaps in their coverage after it's too late. Building coverage and contents coverage are completely separate. You can buy one without the other, though most experts strongly recommend getting both.
Contents coverage protects your personal belongings up to $100,000 under the NFIP. This includes your clothing, furniture, electronic equipment, portable and window air conditioners, and appliances like your washer and dryer. Think of it as everything you'd pack up and take with you if you moved to a new house.
But here's the catch: contents coverage pays on an actual cash value basis, not replacement cost. That means you'll get what your five-year-old couch is worth today, not what it would cost to buy a new one. For valuable items like original artwork and furs, coverage is capped at just $2,500 total. Currency, precious metals, and valuable papers like stock certificates aren't covered at all.
If you're thinking $100,000 sounds like plenty, take a moment to mentally calculate the value of everything in your home. Your furniture, clothing, electronics, kitchen items, bedding, tools, sports equipment—it adds up faster than you'd think. Many households easily exceed $100,000 in contents value, especially if you've been accumulating possessions over the years.
The Basement Problem: What You Need to Know
If you have a finished basement with a home office, entertainment area, or guest bedroom, you need to hear this: flood insurance provides extremely limited coverage for basements. And by "extremely limited," I mean almost nothing beyond essential equipment.
Under the NFIP, building coverage in basements only protects items that are essential to your home's operation: your furnace, water heater, electrical panels, sump pump, and central air conditioning equipment. That's it. All those basement improvements—the drywall, carpet, drop ceiling, built-in bar, home theater setup—they're not covered. Personal belongings stored in your basement? Also not covered, with very limited exceptions.
The few contents items that are covered in a basement must be connected to a power source: your washer and dryer, window air conditioners, and freezers (including their contents). But boxes of holiday decorations, stored furniture, tools, and sporting equipment? You're out of luck. This is why you should never store irreplaceable items or valuables in a basement, even if you have flood insurance.
What Flood Insurance Doesn't Cover
Beyond the basement limitations, there are several significant exclusions in flood insurance policies that can surprise homeowners during claims. Your vehicles aren't covered—not your cars, motorcycles, or even their parts. You'll need comprehensive auto insurance for flood damage to vehicles.
Everything outside your home is also excluded: landscaping, trees, plants, wells, septic systems, walkways, decks, patios, fences, seawalls, hot tubs, and swimming pools. If you have extensive landscaping or expensive outdoor features, understand that flood insurance won't help replace them.
Additional living expenses are another critical gap. Unlike your homeowners insurance, flood insurance won't pay for a hotel room, temporary rental, or restaurant meals while your home is being repaired. You'll need to cover these costs out of pocket or have separate coverage for this.
Mold and mildew damage is tricky. If the mold results directly from flood damage and you took reasonable steps to prevent it, you may be covered. But if mold develops because you delayed cleanup or didn't properly dry things out, your claim could be denied. The same goes for pre-existing mold problems that the flood made worse.
Getting the Coverage You Actually Need
Understanding the distinction between building and contents coverage is essential for adequate protection. Many homeowners make the mistake of only purchasing building coverage, thinking it covers everything. Then disaster strikes, and they discover that all their belongings are unprotected.
Start by assessing your actual risk and calculating the value of your home and possessions. If you're in a high-risk flood zone, both types of coverage are essential. Even if you're in a moderate or low-risk area, remember that more than 20% of flood insurance claims come from properties outside high-risk zones. Floods can happen anywhere.
Don't forget about that 30-day waiting period. You can't wait until a hurricane is forecast and then buy a policy. Flood insurance requires planning ahead. Contact your insurance agent or visit FloodSmart.gov to get a quote and understand your options. If the NFIP limits aren't sufficient for your needs, ask about excess flood coverage from private insurers.
The bottom line? Flood insurance is more complex than most people realize, with separate building and contents coverage, strict basement limitations, and numerous exclusions. But it's also one of the most important types of insurance you can buy. Take the time to understand what's covered, calculate what you actually need, and make sure you're protected before the water starts rising.
