What Is Flood Insurance?
Why is Flood Insurance Important?
The majority of standard insurance policies do not protect against losses caused by flooding due to the prevalence of adverse selection, or the purchase of insurance by individuals most likely to be impacted by the specific peril of flood. In fact, across the United States today, only 20% of homes at risk for flooding are actually covered by flood insurance!
The National Flood Insurance Program defines flooding as a general and temporary condition caused by the partial or complete inundation of two or more acres of normally dry land, or two or more properties (one of which must be your property). Flooding can be caused by the overflow of inland waterways and the unusual and/or rapid accumulation or runoff of surface water (from any source), as well as mudflows. Flooding can be the result of a hurricane, earthquake, landslide, or any other natural disaster. However, it is important to note that while insurance policies may include coverage for earthquake damage, for instance, that same policy most likely does not cover damage from floods that resulted from the earthquake.