Do I Need Flood Insurance as a Renter?
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If you are a renter, you can buy a policy from the National Flood Insurance Program (NFIP) to cover contents up to $100,000. If you are a renter in low-to-moderate risk areas, you may be eligible for a Preferred Risk Policy, which is cheaper than a standard policy. Low-to-moderate risk areas account for 26% of floods in the U.S. but flood insurance is not required, especially not for renters. Even if you live in a low-risk flood zone, it’s highly advisable that you buy a flood policy to protect your things: Your landlord’s flood policy will not cover you!
If you have valuables that exceed the $100,000 coverage from NFIP, you’re better off buying a private flood insurance policy. It may not even cost much more. With that said, if you do not have some type of flood policy, a standard renters insurance policy will not cover the losses of your personal belongings resulting from a flood. However, flood insurance can easily be added to your renters insurance policy. See what else you should know.
Does Renters Insurance Cover Flooding?
When you buy renters insurance, you are covered for flooding that results from a sudden burst pipe or a severe leak due to roof damage after a storm. You are not covered for a flood that is a result of heavy rains, melted snow or a hurricane storm surge.
Consider what it would cost to replace all of the following items (this is only a partial list) and see why it’s important to buy renters insurance and a separate flood policy:
- Mattress and box spring
- Blankets and comforters
- Gym equipment
- Valuables up to $2,500
When you consider what these belongings will cost you to replace today, you’ll see that even the NFIP standard of $100,000 flood policy is not as generous as it first seems. Also NFIP policies are not available in all communities. Your only other option is to buy a private plan with higher coverage. It may cost more but you’ll be fully protected and can add endorsements for any particularly expensive items, like collector’s items or furs and jewelry, without feeling limited by the $2,500 maximum coverage.
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What’s Not Covered With a Flood Policy?
Do not think that if your landlord has a policy that it will cover your losses because it won’t. You will need a flood policy of your own. Even then, not every expense will be covered, like the following losses:
Additional Living Expenses
You will not be reimbursed for food, gas and lodgings if you are displaced due to flooding. Your renters insurance will also not cover food, gas and lodgings because a flood is not a covered peril. Your renters insurance will, however, cover you if you are displaced due to a covered peril, like a fire.
Cash and Important Notes/Certificates
A flood policy will reimburse you for damaged or destroyed items, but it will not reimburse you for destroyed cash or stocks and bonds certificates.
Items in the Basement
While most flood policies will cover, say, a washer-dryer in the basement, they do not cover personal items like clothing, electronics and furniture kept there. So, if you have a home gym in your garage, none of your equipment will be covered by a flood policy, but you will be protected with a renters policy for most types of loss other than flooding and earthquake.
You may have a hard time getting reimbursed for business equipment after a flood if you don’t have a commercial flood policy and your insurer is not aware that you have a home business. Generally, business owners have a commercial liability policy at minimum and commercial flood insurance if they are located in a flood zone. Be upfront with your agent about running a business from home and get the right coverage so you’re not left in a lurch to replace expensive fax machines and copiers and other equipment specific to your job.
How Much Does Flood Insurance Cost for a Renter?
The NFIP offers monthly rates of $99 for contents only coverage, which is all a renter needs (unless you have more expensive items like jewelry valued at over $2500). If your home is located in a flood plain or high-risk zone, your flood policy will cost more. If you live in a low-to-moderate zone, your policy will cost less. The limits of your renters insurance policy may also determine the price if you buy a private flood policy from your current renters insurer.
Factors That Affect Flood Insurance Prices
The following factors determine the cost of a flood policy:
- Age of the building
- Building occupancy
- Number of floors
- Personal belongings (and where they are kept)
- The flood zone
- The flood risk of the building
- The deductible you choose
- The amount of coverage (for instance, you may only insure what’s stored on the first floor but not the upper floors)
Do I Need To Buy a Renters Flood Policy?
In the past, most insurance experts would probably tell you not to worry about buying flood insurance as a renter, unless you live in a high-risk flood zone, but seeing that severe rains, snow and winds are causing flood in many parts of the country due to climate change, it’s not a bad idea to get protected, especially if you live in a building or unit that would be more at risk (as opposed to living in the penthouse suite at the top).
How To Determine How Much Flood Insurance You Need
As a renter, you only have to worry about covering your personal belongings. If you live in a home with several stories, you can store your valuables at the top and insure for less so as to save some money.
The best way to get started is to create an inventory, which you’ll need if you have to file a flood insurance claim. Itemize the list of belongings with what it would cost to replace those items today. Most policies are actual cash policies, which means that you will get back what you paid minus depreciation. This is less than a replacement cost policy would pay out. If you prefer to get back what it would cost to buy new items, consider a replacement cost policy instead but expect to pay quite a bit more.
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Having both renters insurance and flood insurance is how you can completely protect your belongings. Your renters insurance will not cover floods, unless the flooding occurred due to a burst pipe, and flood insurance will not cover you for burglary, fires and many other common perils that a renters insurance policy will cover. You can find the cheapest options out there by comparison shopping. Just enter your zip code below and answer a few easy questions to get started on free insurance quotes.