When hurricanes strike, rivers overflow or rain keeps falling, flood occurs. The federal government created the National Flood Insurance Program (NFIP) to supply homeowners with flood insurance at prices lower than private businesses would provide it. Flood insurance is available for homeowners, renters and commercial property; as of 2010, the cheapest policies for low-risk areas cost $119 a year.

Coverage

Residential flood insurance covers the building and its foundation, NFIP statespays for debris removal in the insured property. The policy also includes plumbing, electrical, heating and air-conditioning systems, built-in appliances and refrigerators, and permanently installed carpets and paneling. It covers personal belongings, as well as $2,500 for person precious items such as artworks or furs. It covers damage to a garage that is detached, but any other detached buildings on the property need their own policy.

Exclusions

Flood insurance does not cover moisture or mold damage that could have been avoided by the owner, NFIP states. It also does not cover the loss of currency; gold; stock certificates or other valuable papers; cars; or external property such as trees, plants, wells, septic or patios systems. Unlike some homeowners insurance policies, flood insurance does not pay for temporary housing, and it doesn’t cover financial losses in the event the flooding interrupts the policy holder’s business.

Access to Insurance

Policies are only available in the event the property owner’s local authorities engages in NFIP, the Federal Emergency Management Agency says: When the government does not adopt floodplain-management policies acceptable to FEMA and enforce the polices once they’re adopted, NFIP won’t provide insurance. Acceptable policies include such matters as building codes which reduce the risk of flood damage. In communities which engage in NFIP, federal flood insurance is available through local insurance agents.

Timing

NFIP takes a 30-day waiting period from the date of order prior to the policy goes into effect; there are some exceptions to this rule, such as if a mortgage lender requires a borrower take out flood insurance in order to get a home loan. Property owners have to pay the entire year’s premium at once, and the policy won’t go into effect until NFIP receives the money.

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