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What Does Flood Insurance Cover? (Flood Insurance Guide)

Do I need flood insurance, and what does flood insurance cover? Read about that and much more in this flood insurance resource guide (complete with interviews from Texas flood survivors).

flooded home, text overlay "what is covered under a flood insurance policy? comprehensive guide"

We've got a flood insurance policy. When you live in Houston, even if you don't live in a floodplain, buying a flood insurance policy is a no-brainer purchase to renew without thought, year after year.

Kind of like auto insurance.

I mean, when you figure out that your city's highest point above sea level is a measly 50 feet (yes, our city is Houston, just ravaged by Hurricane Harvey), and that flood damage is excluded from standard homeowner's insurance coverage…well, you do the math.

It just makes sense.

But to be honest, I didn't really look into our flood policy to figure out what does flood insurance cover in the first five years we had it.

The renewal paperwork just came in the mail, we stuck with the middle-of-the-road $281 option (note: we're not located in a floodplain — just a few blocks away — which makes our plan option costs much lower), and we moved on with our lives.

Pssst: Not a homeowner? Here's information about renter's rights when property has been damaged by flood.

And then, the Memorial Floods hit Houston. You might remember watching them on the news. And guess what? Our home was just a few blocks away along the same bayou that swept anywhere from 1′-4′ of water right through peoples' front doors.

Here's a video for reference, just a mile from our home (hint: that HEB is still closed from the flood damage).

Note: Okay, you don't live in a floodplain and walking up your long, winding driveway can give you a nosebleed. Well guess what else causes a significant amount of flood damage in the US? Hurricanes, winter storms, and snowmelt. And according to the National Flood Insurance Program, all 50 states have experienced floods or flash floods in the last 5 years. So please keep reading.

I was in PA for my brother's wedding during the actual flooding, and my husband was home. He hadn't prepared me for what I was going to see when I flew in a week later:

Emergency response crews camped out in our local shopping center, a Red Cross team scouting the area, dumpsters lined up in people's front yards, debris piles stacked taller than myself as homeowners started the arduous task of ripping out what used to be their walls to attempt to stop Houston's notoriously humid summers from re-plastering them with mold…

It was all very shocking.

We were mighty close to dealing with disaster ourselves — so close, in fact, that our address was cleared for Federal Disaster Assistance money — and feel blessed that we did not have to answer the question firsthand of what does flood insurance cover.

But because of how close we were (plus having gone through both Hurricane Ike AND Hurricane Harvey as well) I decided to take a deep dive into all things flood insurance.

So, let's talk about it.

Pro Tip: get your family in a better position BEFORE disaster strikes by filling in one of these family emergency binder free printables.

What is Flood Insurance?

Flood insurance is an insurance policy for your home and property. It's separate from your homeowner's insurance policy, and covers some of your losses resulting from flooding (note: flooding is considered from the ground up, not from the sky down.

A helpful way to figure out what is considered flood damage is to go straight to the source: the Federal Emergency Management Agency (FEMA).

FEMA defines a flood as:

“A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (one of which is your property) from:

a. Overflow of inland or tidal waters,
b. Unusual and rapid accumulation or runoff of surface waters from any source,
c. Mudflow.”

Most private insurance companies do not offer flood insurance. This is because of something called Adverse Selection, where people who are going to use this type of insurance are likely the only ones who will buy it.

So it would bankrupt private companies.

Yes, you may be able to find private flood insurance policies (and some people get private as a supplement to their federal program coverage — be sure to check out the disadvantages of private flood insurance, in addition to the advantages).

But generally speaking, the majority of people with flood insurance find a policy through the National Flood Insurance Program (NFIP). It's a federally-backed insurance sold through private insurance companies but managed by the Federal Emergency Management Agency (FEMA).

One more thing: some people are forced to buy flood insurance, and others can buy it if they would like to.

What I mean by this is, if you have a home with a mortgage, and your home is located in what's called a “floodplain”, then you must buy and maintain a flood insurance policy. But if your home is not in a floodplain, then you are not forced to hold a policy. There are flood zones, within floodplains, fyi.

Psst: you can look up your address here, and find out if you're in a flood plain or not, and what your flood zone is.

What zones require flood insurance? You'll want to check out this document from FEMA for the most up-to-date information.

Next up, let's talk about what flood insurance covers.

What is Covered Under a Flood Insurance Policy?

How can insurance help me prepare for a flood disaster?

What you should know is, there is building coverage, and there is content coverage. You have to buy building flood coverage ON TOP OF content flood coverage (if you want your belongings to be covered). And both the building coverage and the contents policy have different deductibles you'll need to meet.

The absolute maximum coverage amounts you can get for one-four family residential properties through the NFIP is $250,000 for structures and $100,000 for home contents.

Here is a link to a standard flood insurance policy to give you an idea of what it does and does not cover.

Examples of Contents that would be covered under a Contents Flood Policy:

  • Your clothing
  • Your furniture
  • Your washer and dryer

Examples of Building things that would be covered under a Building Flood Policy:

  • Electrical systems
  • Build-in cabinets and bookcases
  • Build-in appliances (like dishwashers)
  • Your water heater

Heads up: I was surprised to learn that basements and cars are NOT covered by any flood policy.

While sitting in a coffee shop writing articles after a flood had hit Houston, I overheard one of my neighbors talk about how his car was totaled in the floods and he was having to replace it. Thankfully, he had enough coverage with his car insurance company, as he would have been out of luck if he was relying on flood insurance to help with that.

Pssst: We flooded two cars while in Houston. Here's how our car insurance flood claim went.

Besides cars, basements are not covered. However, some items within the basement that are integral to the home/the home’s functioning are covered. For more info, check out FEMA’s list.

And one more thing to remember.

I was contacted by an insurance agent (she wishes to remain anonymous) who brought up a great point.

“Insurance is NEVER intended to take care of a policyholder 100%. The homeowner will always incur costs. Insurance is a risk SHARING tool. An insurance company agrees to SHARE YOUR RISK. But that doesn't absolve the homeowner's / policyholders from understanding their coverage, and having money in savings to cover their deductibles and their share of the loss. It gets a heavy burden when everyone blames the insurance company because they weren't prepared.”

What Does Flood Insurance Cost?

Flood insurance policies cost different for different home locations, as well as for what type of coverage you're looking for (building and contents, or just building). Here are the other factors used when determining your policy cost.

The average flood insurance policy in the US costs $699, but this can vary greatly depending, again, on the flood zone your home is located in and how much coverage you want.

What options are there when choosing flood insurance, and how much do those options cost?

To give you an example of how much does flood insurance cost per year, here's the details of our policy for a home NOT located in a floodplain (a standard flood insurance policy can be found here):

  • Policy Cost: Our policy costs $281 annually ($259 + a $22 Federal Policy Fee).
  • Policy Coverage: The coverage for our building is up to $75,000, and coverage for our contents is up to $30,000.
  • Policy Type: It's a Preferred Risk Policy, meaning we are in a moderate-to-low-risk area.
  • Cost of Maximum Coverage for Us: The maximum that we can get is $250,000 for buildings, and $100,000 for contents.

And my friend, who is in a floodplain? She pays around $900/year for her policy.

There's actually no flood insurance rate calculator, so the best way for you to get specific estimates for your property is by contacting your homeowner's insurance company and asking if a) they offer flood insurance policies through NFIP, and b) if they can give you a quote.

You can get an estimate on coverage costs for your personal home by filling out the flood risk profile box on the right hand side of this page (our estimate came out as moderate-to-low risk, with estimated coverage costs of $44-$266 for content only and $137-$452 for building and contents — completely accurate with what we are paying, though the range is a bit big).

USAA offers flood insurance policies, so you might want to go through them (we switched to them).

Do I Have to Be In a Flood Zone to Get Flood Insurance?

The simple answer: absolutely not.

Not only can you buy flood insurance outside of a flood zone (USAA offers flood insurance policies), but it's recommended.

Look at the stats: 30% of all flood insurance claims are filed in low-to-moderate risk areas.

Straight from the horse's mouth (FEMA):

“People outside of high-risk flood zones file more than 20 percent of all NFIP claims and receive one-third of federal disaster assistance for flooding.”

Flood Insurance Coverage Vs. Homeowner's Insurance

I met Patricia Burns Merritt (Pat) in one of the local Facebook Flood Groups I joined. She's lived in our Houston neighborhood for a long time, and has had to put in one claim on her Homeowner's Insurance, and one claim on her Flood Insurance in the 51 years she's been in her Houston home.

Her experience with submitting a claim to each sheds light on some of the differences between these two types of insurances.

“Not really a surprise, but flood insurance does not pay for packing, storage or relocation expenses.  About 21 years ago we had an electrical fire and had to move out while everything was removed and ozoned for smoke damage.  My homeowners insurance paid for everything, including a rental house, mileage, food, packing and unpacking and the two moves to and from the rental.  I didn’t have to do a thing but point to what I wanted moved to the rental.  That took the sting out of an otherwise miserable three months.”

Here are some other specific differences between the two:

  • Unlike homeowners' policies, flood policies do not pay temporary relocation costs, such as hotels or apartments (this does not mean that you cannot get assistance in a declared disaster area–see below).
  • Flood policies do not pay for damage in a basement, other than to the heating, air conditioning and water systems.
  • Flood policies generally only pay for the Actual Cash Value of damaged personal property (so they deduct depreciation), rather than their replacement costs like a homeowner's insurance does. Pat explained, “FEMA depreciates each item that does not have a RECENT APPRAISAL.  We had appraisals on four items: piano, two rugs, a grandfather clock. They have to pay the appraised value. Everything else is depreciated.”
  • You cannot collect attorney's fees on top of winnings if you sue for more money, like you can with homeowner's insurance.

Process for Filing a Flood Insurance Claim

It's helpful to understand the overall process of filing a flood insurance claim, specifically since various levels of support/aid from various levels of government can quickly get overwhelming.

If you have flood insurance, here's what you do:

  1. Call Your Insurance Agent to File a Claim: The flood insurance program is administered, regulated, and backed by the federal government (National Flood Insurance Program, or NFIP). However, policies are mainly sold through private agents. Whichever agency you have your flood insurance through, you need to call them. They are the ones you'll be filing a claim with (unless you have a direct policy with FEMA; the majority of people have a policy through private insurers). Obtain a claim number. Also, notify them of your temporary/current address (as you may not be able to live in your home any longer and they'll mail you time-sensitive items). When you submit your claim to your insurance agent, get something in writing from them that you submitted it + they received it (even an email).
  2. Register with FEMA: Go to DisasterAssistance.gov and register with FEMA. This ensures you get any future grant help that may be available to you (on top of your flood insurance policy payout).
  3. Work with Your Adjuster(s): There is your insurance adjuster, and then there is a FEMA adjuster. The first is for your flood insurance policy under NFIP, and the second is for any emergency aid. Depending on how big the disaster, there may be teams of adjusters coming in from across the country to deal with the floods. You don't want to throw away your damaged items (if you can help it) before your adjuster sees them. If you must throw something away, document it with photographs, receipts, and whatever else you've got to show evidence of its value/existence. And Mostyn Law Firm suggests that you keep a paper trail with your adjuster by sending them a rundown of your discussions by email. This is in case your insurance company doesn't agree with something down the road when your adjuster has likely moved onto the next disaster. Also a tip from Mostyn Law firm, if you don't agree with the adjuster numbers on the proof of loss form, still sign it, but put a statement above your signature to the effect of, “I disagree with the amount; however I'm signing this so that I can get the money that's there.”
  4. Get Your Proof of Loss in Before the 60-Day Deadline: Your Proof of Loss — a form you sign and submit with the amount you're requesting, supporting documentation, and a sworn statement by you of its accuracy — has to be filed by day 60 from the date of the flood. There can be extensions granted, such as here in Houston, where there was an extension granted for everyone with FEMA insurance (the extension does not include you if you have a private policy) for 240 days after the day of the flood. Note: this is not your claim with your insurance company. But it's extremely important. An example of what one may look like is here.

When you're figuring out what does flood insurance cover, you're probably not thinking about the actual check itself.  So I'll give you a heads up.

If you own your home outright, then you will get the insurance claim check.

And if you don't own your home outright? Any insurance check will likely be made out to you + your mortgage company. In fact, when our own home flooded and we submitted our first FEMA flood insurance claim, our check was made out to Wells Fargo, my husband, and myself since we're both on the title of the loan. And yes, we both had to sign the document as well as a Wells Fargo representative.

It's the mortgage company who wants to make sure you get the repairs done or pay off the mortgage and they'll send you any leftover from that check for doing so. In fact, we also had to sign a paper stating that we would make the repairs and be open to inspection by a Wells Fargo rep within 120 days of receiving the check.

So, are you totally screwed if you didn't sign onto a flood insurance policy at least 30 days before a flood occurs (the length of time it usually takes for a policy to take effect)?

Bonus: You Don’t have to Agree with Your Insurance Adjuster’s Assessment

You have to submit a Proof of Loss form — your statement of the amount of money being requested — within 60 days of a flood event (unless an extension has been given, which did happen in the Houston Memorial Day Floods).

Your adjuster’s estimates and assessment of damage will be on this form, and you have to sign it.

However, you don’t have to agree with it. If you don’t think their figures are right, then Mostyn Law suggests that you put something along the lines of the following statement above your signature (so that you can still get your form in on time): “I disagree with this amount; however I’m signing it so that I can get the money that’s there.”

This may give you wiggle room later when appealing the amount, while still getting this very important form in within the 60-day deadline.

What can you do next? You could hire a Public Adjuster, who is not affiliated with your insurance company. There are fees associated with using them, somewhere around 10% – 12% (though could be higher in states that do not cap the fees). You can also check out FEMA's has several suggestions for what to do when you don't agree with your adjuster.

Lastly, here are tips from Consumer Reports on how to handle working with an Insurance Adjuster.

Will FEMA Help If I Don't Have Flood Insurance?

You still might be wondering, “do I need flood insurance”?

In case you go without it, I want to talk about what happens.

Here's what happens if you don't have flood insurance (your to-do list): 

  1. Register with FEMA: Go to DisasterAssistance.gov and register with FEMA. This ensures you get any future grant help that may be available to you. Disaster assistance is for losses not covered by insurance, and is only available in counties that have been declared as federal disasters. It should be noted that this type of assistance does not count as income. Lodging/hotel expenses may be eligible for reimbursement if the home was damaged to the extent you could not return for an extended period of time, so keep those hotel/motel receipts just in case. There is also Housing Assistance from FEMA, which has a Repair Assistance component, that you might be eligible for. “Housing assistance can include reimbursement for short term hotel expenses; money to rent a place to live for up to 18 months while your home is being repaired; money to repair damage to your home; or money to help you purchase a new home if your home is destroyed. Financial grants from FEMA are taxpayer funded and have a maximum fiscal year dollar amount which is tied to the year the disaster was declared.”
  2. Contact Your Homeowner's Insurance: Pat says that her homeowner's insurance let her know her homeowner's insurance covers nothing from this flood (she contacted them because her flood insurance is through them). However, FEMA says, “If you have Homeowner's Insurance, you may want to contact your insurance company regarding Loss of Use or Additional Living Expenses (ALE) for evacuation purposes.” It is certainly worth it to call your homeowner's insurance and see if they will cover anything at all (though don't expect it).
  3. Work with Any Inspectors: During the application review process, FEMA may call to schedule an inspection of your home.
  4. Stay in the Know: Going to community meetings, and joining popup Facebook groups will get you information that could make a real difference to you. I've learned a wealth of information from the Facebook Group I joined, such as how people in our county can get an extension on filing taxes with the IRS, and can get an exemption on sales taxes paid to make repairs to their home.

It's also important to remember that you could jump on flippers that roam the streets after natural disasters.

You can't blame people for trying to capitalize on an opportunity, especially when doing so may relieve a flood-devastated homeowner with the option to walk away.

However, be very wary of what you're being offered and communicate with your neighbors. I sat next to a man at the law firm meeting, and he told me he had received an offer on his home that was in line with true market value. And he took it. He was a happy customer (perhaps not ‘happy', as having to walk away from his home before he was ready is quite an emotional thing, but certainly he felt like he had a pitcher of lemonade from a bowlful of lemons).

However, he spoke with another neighbor who received an offer that was a whopping $110,000 lessthan his. He was quickly able to communicate with her — as she only had 48 hours to accept/deny the offer, for whatever reason — that she was getting a raw deal.

A disaster is not the time to withhold precious information from your neighbors, and you'll likely benefit from being able to air some of your emotions anyway, so strike up that conversation.

How Does Flood Insurance Payout?

Okay. So you've got a flood insurance policy, you've flooded, and you set into motion the claims process (check out Part I of this series if you need to review any of that or if you need to know what happens if you don't have flood insurance).

Now what?

Here's where things might start to get interesting. Not necessarily in a studying-the-Mona-Lisa way, but more so in a navigating-retirement-account-withdrawal-rate kind of way.

Most of this + what does flood insurance cover you're not likely to find in the policy itself (here's a link to a standard flood insurance policy for reference), at least not in plain English.

This is the type of stuff that lands in your lap after the disaster actually hits and you're rain-boot-deep in paperwork trying to sort your life out.

So let's go over some of the sticky issues people can face after their home has been flooded as well as what does flood insurance cover.

Pssst: not a homeowner? Here's information about renter's rights when property has been damaged by flood.

When you flood, there are things you need to do immediately afterwards (while you're going through the claims + payout process).

For example, you need to secure temporary housing.

You have to remember that if you flood, chances are good many of your neighbors did as well. And many homes will become hazardous to live in. Some people can live with their relatives, while many others will need to relocate to apartments. We all know that an increase in demand leads to an increase in price, which means that any money you receive as rent/house assistance from FEMA or elsewhere is likely not going to go as far as it could have pre-flood.

For example, one woman I interviewed, Pat, was able to find a place to rent just four minutes from her home. However, the monthly cost is $1,900, and I've been told by others that the housing assistance offered by FEMA is $721/month.

There are limitations, both financial and geographical, to this lifeline as well. Leonor Rouse stayed with family and friends, and said that the TSA locations offered were pretty far from her area. She received rental assistance for two months, but will be ineligible for more because

“…our rental and mortgage is below 30 percent of our income.” Ultimately, she was “…forced to get a one year rental since short term rentals are not in our price range in the area.”

Leonor's situation brings up another great point: unless you've managed to pay off your mortgage, your mortgage company still expects you to pay your monthly mortgage + escrow whether you're living in your home or not.

At the same time, you'll need to pay your flood insurance policy deductible(s).

Most policies come with a $1,000 deductible on the building, and a $1,000 deductible on the contents (some newer policies have $1,250 for each). Hopefully you've got this stashed in an emergency fund somewhere earning that <1% (oh, for the days of 5% interest on savings accounts…).

Then, you'll do some waiting to see if your home meets the dreaded 50% rule or not.

This one's a biggie that has caught many homeowners by surprise (myself included). Leonor says, “[m]ore than anything I wish I had known about the 50 percent substantially damaged and improved  constraint to force an owner to comply with elevation requirements. I would not have purchased the property had I known.”

FEMA has a rule (here's the plain English explanation) that if your home is in a flood hazard area, and is damaged at 50% or more of its appraised value, then you have to jump through a whole lot of hoops to move forward after flooding. As in, you have to elevate your home to a certain level, as well as bring it into compliance with the current building codes in your flood zone. Your options become either to elevate (very costly; one man told me he was quoted $125,000 to get the elevation he needs; others have said that companies will not elevate over a certain footage, forcing them to pick one of the other options), relocate, demolish, or floodproof.

Here's the thing though — remember how I detailed how you can fight property taxes by getting your appraisal lowered? The City of Houston used tax appraisals to determine this 50% threshold, not market appraisals, which can be substantially higher (for example, our tax appraisal is $165,499, and our market appraisal is $186,531).

So if you are around 50% of damage, then it is probably in your best interest to get a private appraisal done on your home, as this will give you more leeway to get under that 50% threshold. You would do this through a “Substantial Damage Determination Appeal”.

Also, your flood insurance policy includes $30,000 for an Increased Cost of Compliance if you are at 50% or higher damage. However, this is still within those $250,000/$100,000 limits. So if you maxed out that $250,000 on your claim, then you cannot get more money to help with the cost of compliance.

Note: the other reason to hold off on decision-making until you decide this point is because you could throw away good money. For example, you don't want to start an expensive remediation process only to find out halfway through that you have to demolish your home. 

You also will need to brace yourself for the 80% rule.

On top of bracing yourself for an Actual Cash Value (ACV) assessment of your personal property items rather than replacement costs (so you might get $100 for a couch instead of the $500 it will cost to buy a new one), you might be in for an even worse surprise with what does flood insurance cover.

As explained to me by an insurance agent who wishes to remain anonymous,

“You must insure your home for either 80% of its replacement cost or $250K maximum coverage, whichever is less in order to receive the full ACV of your damages. For example, if you have a $500K home, 80% is $400K. So therefore you must carry the $250K limit. If you do not insure your home for at least 80% of its replacement cost, then your damages will be pro-rated by the percentage of coverage you carried.”

So that $100 for your couch could come in at even less if your percentages are off.

You'll be working with an adjustor, and you'll need to decide if you want to go with their information, or get your own quotes.

Your adjuster likely uses the software Simsol (though there are others) when they determine what it's going to cost for your home to be restored. This database does not account for the locally inflated labor + supply costs you're going to come across from everyone needing the same, suddenly-more-precious-than-gold, construction materials.

One drive down my street, and you'll see no less than four handwritten signs promising black-market supplies of unlimited sheetrock materials, for example. This is why Mostyn Law firm suggests (and to be honest, what several adjusters suggested to homeowners “off-the-record”) that you get your own quotes as they will likely be 10-20% higher (re: more realistic) than what your adjuster can do for you.

Hint: you can appeal a Flood Claim through FEMA.

Another problem you might come up against while waiting on that payout? What I like to call the Grant-Loan Conundrum.

You're probably starting to see just how expensive getting a home repaired post-flood can be, especially if an adjuster has been out to your property and you've learned the financial limits of your policy.

Chances are you will need to pay for substantial chunks out of your own pocket to do so. The Small Business Administration offers Disaster Loans at low interest rates to help with costs post-flood. Some homeowners need to turn to these because they simply can't hold out for what, if any, grants get approved to help with the substantial costs of things like elevating homes.

The conundrum? One man I spoke with told me that if you apply and receive an SBA loan, then you will be ineligible for a grant if one gets approved later on.

Catherine Dunn, the district director for Texas State Representative Sarah Davis says,

“Unfortunately, the gentleman you spoke with is correct. Federal law prohibits a homeowner from receiving federal assistance after a disaster from more than one source. If someone takes out an SBA loan now, they will be ineligible for grant assistance should it become available down the road. This has put many homeowners in a bind in regards to what they should do.”

So how long might you have to wait (and by wait, I mean potentially pay rent on top of a mortgage for a home you may not be able to live in)? According to Catherine, FEMA Flood Mitigation grants and Hazard Mitigation grants showed up 3-6 months after Hurricane Sandy to the state of New Jersey, and the average turnaround time, if there will be funds, is 8 months.

Our Personal Flood Insurance Claim Payout Experience

To be completely transparent, I had no idea that less than one year after writing the first draft of this article, we would be filing our OWN flood insurance claim!

Little did I know we'd be filing our own flood insurance claim less than one year later.

Amanda's Note: Maybe now's the time for you to look into flood insurance for yourself?

Our Flood Damage: Wood Warp in Our Living Room

What was extremely sad was that a significant portion of the people whose homes had flooded less than a year earlier experienced yet another home flooding.

We were fortunate. We did not take in any water over the substantial rains on April 18th, 2016. Instead, the wood warped in our living room floor under the windows.

No, the water did not come in from the window (and yes, they asked this question when I called our insurance rep). Somehow, the water came in from the ground.

Our backyard floods several times per year, but it has never done so “close” to our house (granted, of course the backyard means it's close to our home. However, we normally have about ten feet where there is no flooding leading up to our door).

Pssst: FEMA lays out the exact steps for submitting your claim here. But if you want to know how it REALLY looks, keep reading. 

I spoke with my grandmother in passing on the situation, and she said I should call our insurance company. Honestly, I didn't think flood insurance would cover this sort of thing since our home wasn't filled with inches of water.

But I was wrong (thanks, Mom-Mom)!

The catalyst for me calling our homeowner's insurance company on May 9th, 2016? The warped wood started turning black and I was concerned about mold.

After clearing up with the rep that the water did not come in from the window (which would not have been covered), she took some info from me and said I'd hear from a claims adjustor very shortly.

I've heard firsthand from some people that the flood claim process can be a nightmare. In fact, I wrote about some of the sucky ins and outs when dealing with flood insurance claims and what does flood insurance cover − a whole other bear than homeowner insurance claims.

So I was pleasantly surprised with how easy it was for us.

On the afternoon of May 9th, 2016, the claims adjustor called me. He had been in the area since the flooding because there were so many flood claims to make, and we were fortunate to catch him on his way home to Kentucky. He spent about 45 minutes taking measurements of our home and of the living room. He put us down for a claim of $4,732.02.

I was floored!

We were fortunate in that even though the wood was only warped in a small portion of the living room (about a 2′ by 2′ area), the adjustor said that they would replace the entire living room floor. That's because they weren't going to attempt to match the original 1970s parquet wood floor (hallelujah for that!).

Here's the Chronology of the Rest of the Events:

  • May 11, 2016: We received our Proof of Loss form from the adjustor by email. It was 11 pages long. We just needed to sign, date, and return the first page.
  • May 17, 2016: Next, we received a letter from the National Flood Insurance Program saying that our information with them was incorrect and didn't match up. Apparently they did not have our mortgage company information. So I faxed them proof of our mortgage on May 17, 2016.
  • May 25, 2016: We received a letter from the National Flood Insurance Program stating that they had updated our mortgage information per our new info received.
  • June 2, 2016: We received a check for $3,732.02. The entire claim was for $4,732.02; however, our $1,000 deductible was subtracted out.

The first thing I did? Swept that money into our no-touch savings account. If it stayed in our checking, I'm sure we would've eaten away at it here and there (don't think the checking account gremlin skips our home!).

Amanda's PSA: This is a good time to mention again how important it is that even if you don't have an emergency fund, that you at least have a savings account with the amount of your insurance deductibles. What if we didn't have that extra $1,000 hanging around? Since we still have a mortgage on the home, it's our responsibility to make sure the repair gets done and Wells Fargo has every right to demand it. Granted, we hope we can get a quote for less than the $4,732.02 estimated by our adjustor, in which case it would not cost us $1,000 on top of the claim check. But you just never know when you will be on the hook for your deductibles. 

When the check came it had both of our names on it, as well as our mortgage company's name, Wells Fargo. So we had to go into the bank branch together to endorse it, then have a manager endorse it on their end.

We also had to sign a paper stating that we would make the repairs and be open to inspection by a Wells Fargo rep within 120 days of receiving the check.

What's Next for Us

Unfortunately, we still haven't replaced the floor. But it's on our need-to-get-done-ASAP list, especially with just a month to go before our 120 days is up. So we're getting quotes and will be choosing a new floor in the next few weeks. Hurrah!

I'm a little worried about the work, as someone at the bank told me that sometimes when things get ripped up bigger problems are found. So we're crossing our fingers that it goes smoothly. Also, should there be additional damage, then we may be eligible for a higher claim and can go through that process of getting an adjustor out again.

For now? We're thankful that we get to do some floor shopping and update the parquet wood floor we never enjoyed anyway (the only parquet wood in the home)!

It's Decision Time

So, after all of this info and experience, I've got two questions for you:

  • If you already have a flood insurance policy, do you feel good about the amount you have?
  • And if you don't have one, do you think it's time that you purchase one?

Remember, there is a 30-day waiting period for most policies to go into effect, so if you wait to purchase a policy until you hear on the news about a tropical development, it might be too late.

As for us, if there's one thing I've learned, it's that flood damage is incredibly expensive to fix. This flood insurance deep-dive project, along with driving up and down the streets of debris-filled streets and flooded homes, has been eye-opening. We will likely be increasing our policy limits at renewal time. Perhaps not up to the $250,000 limit, but at least enough so that we are covering 80% of the replacement cost of our home.

And dealing with financial catastrophe while in the muck of emotional upheaval is something I'd rather not have to do.

Flood FAQ

I've got just a few more really important pieces of information that I wanted to leave you with.

You Cannot Collect Attorney Fees If You End Up Suing Your Insurer or FEMA

Unlike homeowner’s insurance, if you end up suing your insurance company or FEMA for more money from your flood insurance through the National Flood Insurance Program (like this couple is doing), you can’t actually collect attorney fees on top of any winnings.

Living in a Flood Hazard Area Might Dictate How You Move Forward

If your home is in a flood hazard area and is considered damaged beyond 50% of its appraised value, then FEMA dictates you will need to elevate and bring your home into current compliance standards. This means you will have to pay for code updates and upgrades, as well as elevate it. The most you can get from within the maximum policy amount ($250,000) to comply is $30,000. Yet raising a home is likely to cost you six figures (one man told me his quote was $125,000! Here's another example of how expensive this can be).  Your four options are: Elevate, Relocate, Demolish, or Floodproof.

You Can’t Get a Loan and a Grant, and Grants Take a Lot Longer to Come Through

After a flooding disaster, your home is likely to be unlivable. So you will need to find temporary housing, pay deductibles, and keep paying your mortgage (if you have one). Check out this post for what to do from a financial perspective (and specifically what happens if you don't have flood insurance).

Because of having to pay for lots of things at once, some people take out low-interest, Small Business Administration Disaster Loans.

However, there also may be grants coming down the pipeline. A post-disaster grant may get passed by your city or FEMA — such as FEMA Flood Mitigation grants and Hazard Mitigation grants. However, Catherine Dunn, the district director for Texas State Representative Sarah Davis let me know that, “Federal law prohibits a homeowner from receiving federal assistance after a disaster from more than one source. If someone takes out an SBA loan now, they will be ineligible for grant assistance should it become available down the road. This has put many homeowners in a bind in regards to what they should do.”

How long might you have to hold out? Grants showed up 3-6 months after Hurricane Sandy to the state of New Jersey, and the average turnaround time, if there will be funds, is 8 months according to Catherine.

Psst: they're working on this right now for Hurricane Harvey victims.

You have to Cover Your Costs from this Disaster Until Your Claim Comes through

Perhaps not entirely surprising, but this one could really catch you off guard (especially if you don’t have a cushy savings account or a high limit on a credit card to see you through).

One flood victim I interviewed, Patricia (Pat) Merritt, had a check cut to her. “…[The adjuster] couldn’t tell us exactly how much the insurance would pay until he feeds his numbers into his software program, but it looked to his experienced eye to be in the $85,000 to $115,000 range.  This is structure only.  The contents are handled entirely differently…[Our] adjuster said he tried to get the money to the policyholders within 30 days of his visit.  FEMA Fed-Exed me a check for $15,000 to get started.  I am financing the repairs out of pocket at this time.”

Another flood victim I interviewed, Leonor Rouse reports, “Length of time adjuster takes and time to get check is between 60-90 days.”

Your Property Taxes, even if You Don’t Flood, Will Likely Decrease for the Next Year

Finally a happy financial surprise!

You might have to put in the paperwork to make this happen — as I’m sure many tax jurisdictions aren’t eager to see their tax revenue go down voluntarily. But if your area experiences flooding, whether your personal home is spared or not, then the property values of all the homes will likely decrease at least temporarily. In our city, you can only raise the appraisal amount by 10% each year, so fight property taxes could reap you savings for years to come.

You Might Owe Money Back to FEMA

One more financial point I'd like to bring home.

It's super-important to understand the difference between a loan and a grant — and which one you're getting — when you get assistance/apply for assistance after a flood disaster.

For example, Federal Disaster Assistance is generally in the form of a low-interest loan. And the Small Business Administration also gives out loans to homeowners to help with post-flood relief.

But there might be other reasons why you would get a Notice of Debt Letter from FEMA.

Common Reasons for Recoupment:

  • Duplication of benefits with a household member
  • Duplication of benefits with insurance
  • Damaged dwelling wasn’t your primary residence
  • Failure to maintain flood insurance on damaged dwelling
  • Erroneous calculations
  • Misspent the money
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Amanda L Grossman

Personal Finance Writer and CEO at Frugal Confessions, LLC
Amanda L. Grossman is a writer and Certified Financial Education Instructor, Plutus Foundation Grant Recipient, and founder of Frugal Confessions. Over the last 13 years, her money work has helped people with how to save money and how to manage money. She's been featured in the Wall Street Journal, Kiplinger, Washington Post, U.S. News & World Report, Business Insider, LifeHacker, Real Simple Magazine, Woman's World, Woman's Day, ABC 13 Houston, Keybank, and more. Read more here or on LinkedIn.


Friday 23rd of September 2016

Learned a lot from these articles. Have flood insurance. Flooded second time in May 2016 and it has been a horrible experience. First flood in 2009 the insurance company and adjuster were good to work with. This one has not been the same experience. I would have loved to have known about the law firm and if it ever happens again I will hire them and an independent adjuster on my own. Would be well worth the money, time and my sanity. I have turned into a person that is angry and fighting for what I thought I paid for with this insurance. I don't like me much these days. My 120 day deadline for the Proof of Loss is up Sunday the 25th of September and I haven't received it from the insurance company. I did my own today and emailed it to them and the adjuster along with others as verified proof I had it in on time. Horrible, horrible experience. Thanks for the information. Hope I never have to use to again but an armed it I do.


Saturday 17th of September 2016

Glad the process was so smooth for you (so far)! Can't wait to see what your new floor looks like :)

Amanda L Grossman

Sunday 18th of September 2016

Thanks! We picked it out two days ago and it will be installed this week. Sooo excited! Unfortunately the little guy and I will probably have to stay out of the house a bit for those two days...the living room cuts through access to most of the house. We'll figure it out;).

Sara Wilson

Monday 20th of June 2016

Very Superp Article Amanda ! Thanks For sharing !

Hazel Owens

Monday 16th of May 2016

I didn't know that flood insurance was so limited. For instance, I was surprised that it doesn't cover damage in the basement. However, like you said, having flood insurance is much better than not having it if disaster strikes. Having some things covered and being able to get repairs done is better than having to pay for everything by yourself. Thanks for the information.


Thursday 19th of November 2015

Wow. Appreciate the in depth look at flood insurance. We live in a 50 year flood area and this topic was a little hazy for me. This post has cleared up several questions I have had. Thanks!