Flood insurance is a separate policy that must be purchased on top of a good homeowners insurance policy for a homeowner to be fully protected against the wrath of natural disasters.

The flood policy will cover damages caused by flooding from excessive rains, hurricanes, or even earthquakes. It does not matter what caused the flood. It is the flooding itself that is covered. This is a critical distinction.

Many homeowners are under the false impression that if they have a policy that covers the destruction from, for instance, earthquakes, any flooding that results from earthquakes will be covered by their homeowners or earthquake policy. This is untrue. In that case, the direct damages from the earthquake would be covered. The damage from the flood, even though it occurred as a result of the earthquake, would not be covered.

Why don’t insurance companies cover the miserable mayhem caused by flooding in homeowners insurance policies? Simple economics. They found that most people who wanted to insure against flooding resided in high-risk areas. This means that the risk pool is not large enough to absorb the insurance companies’ losses due to claims, making flooding mayhem to their profitability.

Because of the devastating losses that occur due to flooding, the U.S. government established the National Flood Insurance Program “NFIP” in 1961. This program makes insurance for flooding available to all homeowners that live in a community that participates in NFIP. Most do. Homeowners can now buy this important insurance through a number of carriers.

Who needs this insurance? Anyone in a flood-prone zone should not go a day without this insurance. But even those that live outside the flood-prone areas should remember: flooding occurs everywhere, mayhem has no address.