Is a Flooded Basement Covered By Homeowners Insurance?

This seems to be a sort of million-dollar question for homeowners. Is flood damage or water damage covered by insurance? The short answer is that it might be. For the longer answer, read on.

Water damage comes in several forms and from several causes. Each has its own provisions in home insurance coverage. For example, flood insurance requires a separate purchase from the NFIP (National Flood Insurance Program) for those who live in flood plains. Otherwise, flood damage will not be covered by insurance.

To make sure that your flooded basement will be covered by homeowner’s insurance, you have to determine the cause of the flood. Generally, if it’s something that was the fault of the homeowner or could have been prevented, it may be denied coverage. There are also other provisions in place depending on the policy that you choose.

That’s why one of your first calls should be to your home insurance provider. Then, you’ll also want to call a water restoration expert who can help you start assessing the damage and coming up with a cleanup strategy.

Can You Get All Risks Covered?

There are plenty of ways to get insurance to cover a flooded basement. In addition to the standard coverage for various events that is available, you can purchase additional policies and add riders. An example would be water and sewer backup due to groundwater (groundwater isn’t usually covered on home insurance policies). Or coverage for basement flood due to a sump pump failure.

You may not be able to insure against every single type of incident that could lead to a flooded basement, but you can do quite well to mitigate your risk by insuring your home against as many potential threats as possible. If you’re not sure where to start, ask your insurance agent for more assistance, or talk to a water restoration company that can explain insurance from their perspective and help you get better coverage.

What About Replacing My Stuff?

The next big question people have is how they will be compensated for their losses. The good news is that while you might not be able to salvage that certificate from your first college that you were so proud of, you can usually get more money than your items were actually worth to replace them because of that nifty little thing called inflation.

The theory is that your belongings depreciate over time, so their actual value might not reflect their replacement cost. Therefore, while your home might be insured for $500,000 of actual value, it could have as much as $1 million in replacement value coverage to ensure that you can re-purchase everything at today’s (likely) higher prices.

If you had an old treadmill in your garage that you got at a garage sale for $40, the insurance company can’t guarantee that you’ll get a deal like that again. Therefore, they’ll determine the average replacement cost of a comparable model and give you that amount.

It’s a lot of complex math and numbers, so it’s best left to the insurance company. However, it’s good to know that you won’t have to worry about replacing anything lost in a basement flood.