Flood insurance is a valuable instrument that covers direct physical losses if your property is damaged or destroyed by a flood. The damage caused by flooding can be devastating. It can easily turn a thriving community into a wasteland. While flooding can potentially take place anywhere in the U.S., the Federal Emergency Management Agency (FEMA) has designated several areas especially high-risk.

If you live in an area that poses a special risk for flooding, you should definitely consider purchasing a flood insurance policy. Flood insurance has two types of coverage: building and contents.

  • Water heaters and furnaces
  • Heating and plumbing
  • Refrigerators, stoves, dishwashers, and other built-in appliances
  • Cabinets, bookcases, blinds
  • Foundation and staircases
  • Detached garages
  • Water tanks, fuel tanks, and solar equipment

Because flood insurance covers only things affected directly by water, there are a number of things that flood insurance does not cover. For instance, if your area is hit by a hurricane, some parts of your property could sustain wind damage not covered by flood insurance.

Before you take out flood insurance, you should always take inventory of both the inside and outside of your home. Flood insurance can have limitations that prevent you from getting top value for lost items.

In some cases, the basement of your home may not be covered. Because it is considered an area beneath the main structure, there will be limitations. Certain items of personal property stored in the basement like washers and dryers and foods will be covered. But other items like clothing, furniture, kitchen supplies, and books will not be covered.

If you are unsure about your area’s potential for flooding, be sure to check out FEMA’s flood zone to analyze your risk. If you live in an A zone or a V zone, it is wise to invest in flood insurance. People who live around dams are also susceptible to flooding. The vast majority of dams around the U.S. are over 50 years old. This puts them at high risk for failure.