Standard renters insurance policies provide coverage for your belongings if they’re damaged or broken, but typically only if the cause of damage is one of the named perils, or risks, listed within your agreement. Natural disasters or catastrophic events, such as flooding, are not normally included in these agreements and must be purchased as a separate policy.
If you live in an area that is at high-risk for floods, you can purchase flood insurance as a renters insurance policy add-on by contacting your provider and enrolling through a Federal Emergency Management Agency (FEMA) program or private insurance firm. Read on to learn more about renters insurance coverage and whether you should take out an additional flood insurance policy.
Renters insurance does not typically cover flood damage
In the event of a covered emergency, renters insurance will provide you with funds to reimburse and/or replace your damaged personal property without you having to pay anything out-of-pocket (after your deductible is met). But unless you have taken out an all-perils policy, flood damage is not covered by most renters insurance agreements, as it is both an expensive and high-risk event.
Some policies may cover the cost of repairs for sudden and accidental water damage, such as internal leaks or burst pipes, but the vast majority do not extend to flood damage.
Here’s a simple way to think about it: Your renters insurance probably covers any damage made from water inside the home, while add-on flood insurance covers damages from water that comes into the home from outside.
Purchasing a separate flood insurance policy may be beneficial to some renters
If you live in an area that is at high-risk for flooding, you should certainly consider purchasing this insurance add-on. To increase your financial security and limit out-of-pocket expenses from damage to furniture, electronics, and other personal property, you must purchase a flood insurance policy in one of two ways:
Option 1: Purchase insurance through the National Flood Insurance Program (NFIP). Subsidized by the federal government, the NFIP exists in certain areas and provides flood insurance coverage with a limit of $100,000 on an actual cash value basis. This means that your insurance will reimburse you for damages made to all of your personal belongings, without consideration for how their value has depreciated over time, allowing for the maximum repayment option.
Option 2: Purchase coverage through a private insurance company. Though this option is slightly riskier and may provide you with less coverage and more personal liability, it is a great option for renters who do not live in high-risk areas. So long as your insurance company has the ability to fulfill all claims in the event of a localized catastrophic disaster, such as a powerful hurricane or tropical storm, you will be sufficiently covered.
Tip: Utilize FEMA’s online flood map to determine your home’s level of risk for flooding.