Homeowners Versus Flood Insurance Policies
As the 2017 hurricane season gains strength following Hurricane Harvey in Texas, residential and commercial property owners along the Gulf of Mexico and in other coastal or low-lying regions across the country are likely to be double checking their insurance coverage. Damage caused by flooding is not typically covered by homeowners and renters insurance policies. Rain-related damage may, however, be covered. Property owners who hold a mortgage on a home or commercial building located in certain zones at high risk of flooding are required by law to purchase flood insurance, under Congressional rules applicable to federally regulated or insured lenders. The National Flood Insurance Program (NFIP) is a federal program that offers flood insurance at favorable market rates to homeowners and other property owners. According to the NFIP, flood insurance covers direct physical loss caused by flooding conditions. A flood is considered to be “an excess of water on land that is normally...