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Kevin Estevez

Flood Insurance and Flood-Related Property Damage in Arizona

Standard insurance policies do not cover flood damage, and even federal flood insurance falls short of covering all personal property


As a result of the flooding caused by the historic rainfall on September 8, 2014, many Phoenix-area homeowners and businesses face unexpected repairs of water-damaged roofs, garages, interior flooring and basements.

In most cases, their flood damage will not be covered by insurance, as standard homeowners insurance and/or property insurance does not cover flooding or damages caused by flood waters. Such protection generally requires separate flood insurance.

To protect themselves from floods associated with heavy rains and other conditions, property owners, renters and businesses can obtain flood insurance through the National Flood Insurance Program (NFIP). The NFIP is administered by the Federal Emergency Management Agency (FEMA), which works with private insurance companies to provide flood insurance.

However, even the purchase of federal flood insurance can still leave a person or business underinsured, especially if they have a finished basement, because NFIP insurance typically covers only structural and limited mechanical items in basements; it does not cover water damage to personal property and furnishings. Thus, the collapse of a basement wall will be covered, but damage to wine cellars, home theaters and/or wet bars located in basements will not.

To fully insure personal property and contents against flood damage, property owners must obtain “excess flood insurance.” Most of the well-known names in homeowners insurance do not offer this type of coverage; instead, property owners will have to turn to specialty insurers of residential basements. Excess flood insurance will also be necessary if structural damage to the property could exceed the $250,000 limit on structural repairs under NFIP coverage.

To summarize, a typical property insurance policy is not going to cover any flood or surface water damage to property. Furthermore, federal flood insurance is not going to cover damage to personal property and contents in finished basements. Accordingly, property owners are going to need something more than standard insurance to protect themselves from floods.