When Does Flood Insurance Pay Out?

In today's video, we discuss what might be the top one question everyone has on flood insurance. When does it payout?

When it comes to insurance it's pretty much common knowledge to know the exact time your insurance takes effect. This is something that you dedicate payments of your hard-earned money to, so it's pretty understandable if you're eager to know when this will actually payout.

I've mentioned how getting flood insurance is basically extra insurance for your property since it's not covered within your standard homeowners policy. Basically, this will ask you to pay for the flood and homeowners insurance policies separately. I've heard a lot of scenarios where policyholders would tell me, "Hey my basement flooded, how should I go about filing a flood insurance claim for that?"

To that I answer, you can't. There's only one reason for you to be able to have your flood insurance payout and that's when you're impacted by a flood or flooding event. It's important that we understand what's considered a flood. To echo our podcast episode below, water damage will only be considered as flood when there are either two acres of land or two parcels are covered in flood water.

When we say two parcels, this means property in your area. It doesn't really have to be two buildings, homeowners, or establishments. It may be that your house was inundated by water as well as the street or road in your vicinity. Even if it's a park, if your house was affected due to an excess of water from an overflow, tidal or storm surge, or heavy rainfall, it will fall under flood.

Now, flood damage is very different from your regular water damage or water backup. Basement flooding usually isn't considered flooding even if your whole property's covered in water, but no one else is really impacted then flood insurance won't provide coverage for the damages on your property. This will have to be consulted with your insurance agent or insurer under your standard homeowners insurance policy.

Even a private insurance company won't really cover this type of damage under flood insurance, so this won't be enough of a reason for you to be able to get credit for a flood claim. Any losses from this type of incident will be looked into by your homeowners insurance provider.

However, if your community had the same type of basement flooding and it was determined to be due to a recent disaster, then as a homeowner, you should be able to write this down with your flood insurance policy. Keep in mind that filing a frequent flood claim will also impact your insurance premium from both federal and private insurers as your property will be marked under the repetitive loss of use list. This list generally contains properties that are deemed to have higher risks of flood damage and insurers like the National Flood Insurance Program (NFIP) and the private market's going to take their time and assess your flood insurance premium changes.

So if you have any questions on flood insurance, water in your basement, and how flood insurance payout really works, please feel free to reach out to us by clicking our links below.

Remember, we have an educational background on flood mitigation in order to help you protect the value and safety of your property long term. It's best that you have the knowledge and awareness to be prepared when crap happens.