Renters’ Guide to Flood Insurance

As a renter, you will buy flood insurance only to help you pay for flood damage to the things you own inside your home. This is often called “contents coverage.” These contents include things like televisions, computers, clothes, toys, and furniture. The coverage also applies to washers, dryers, and portable (not built-in) microwave ovens that are owned by you (not your landlord). Ask your insurance agent for a full list of what is covered.

You will not buy building coverage, which would help pay for damage to things such as walls, floors, central air conditioning, furnaces, water heaters, refrigerators, and stoves. You do not need this coverage because you do not own your home. If anyone buys this coverage, it would be your landlord.

As a renter, you are almost never required to buy contents coverage. But there are two very important exceptions to this general rule. The following exceptions apply only if you live in an area that the federal government has classified as being at a high risk for flooding:

• There is a flood and you want to receive federal assistance to help you pay for your flood damage. To get this disaster assistance while you still live in your current home, the federal government will give you the money only if you also agree to buy flood insurance. You must continue this flood insurance coverage for as long as you live in the same home. The requirement ends when you move.
• You received federal disaster assistance after a flood, and you want to be eligible for federal assistance if your home floods again.

When you must buy flood insurance in order to receive federal disaster assistance, you will have two options:

• Purchase a Group Flood Insurance Policy from the Federal Emergency Management Agency (FEMA). This policy costs $600 for three years of coverage. FEMA pays for this policy. To make this payment, FEMA lowers by $600 the maximum amount of disaster relief money you are allowed to receive. After the three years are up, you must buy an individual flood insurance policy to maintain your coverage.
• Purchase an individual flood insurance policy. FEMA calls this “standard flood insurance.” One advantage of purchasing an individual policy is that you can pay to receive as much as $100,000 in coverage for damage to your belongings. Under the group plan, this coverage is limited to $34,900.

Your Landlord’s Role

As the owner of the property, your landlord may be required to buy flood insurance for damage to the home or building. A building is required to have flood insurance if it is located in a Special Flood Hazard Area (SFHA), often described as a high-risk area for flooding. If it is not located in an SFHA, your landlord can choose to buy flood insurance but does not have to.

Renters generally pay less for flood insurance than homeowners do. That is because you are not buying coverage for damage to the structure of the home. You are buying coverage only for damage to the things you own inside the home.

How much you will have to pay depends on many factors. These factors include:

• The risk of flooding where you live
• Whether you want the insurance to pay for damage to things below ground level, such as in your basement
• The deductible you choose
• The amount of coverage you buy

The most contents coverage you can buy is usually $100,000. That means the insurance company will not pay you more than $100,000 to repair or replace your damaged items.

In an ideal situation, you would buy contents coverage that equals the value of the things in your home that are covered by the policy. If that is not possible, it would be best to buy enough contents coverage to pay for the value of the most important things you own inside your home.

For example, you find that the most important things you own in your home are valued at $12,000. So you buy a flood insurance policy with contents coverage of $12,000. That means the insurance company is agreeing to pay you as much as $12,000 to repair and replace things that are damaged by a flood.

You might decide that it costs too much for you to buy flood insurance that covers the full value of the most important things you own. In that case, you will need to make a personal decision about how much coverage you can afford and need.

Starting the process for buying flood insurance is easy. Here are some simple steps to follow.

1. Contact an insurance agent. This could be the one you already use for renters insurance.
   1. If you do not have an insurance agent, you can check this list for insurance companies that sell National Flood Insurance Program (NFIP) flood insurance policies.
   2. You also can contact the NFIP Referral Call Center at 800-427-4661. Ask the person on the phone to refer you to an agent who sells flood insurance.
2. Let the insurance agent know you are a renter. This means you need flood insurance for your home’s contents only.
3. Your insurance agent will help answer your questions on what coverage is right for you. The agent will tell you how much the insurance will cost or give you an estimate.

NFIP flood insurance rates do not differ from company to company or agent to agent. That means the price you pay for the insurance itself should be the same no matter which agent you buy it from.

Ask your agent:

• Does my community participate in the National Flood Insurance Program? If the answer is “yes,” you know flood insurance is available in your community.
• What is the level of flood risk for my home? This level of risk will affect the price you pay for insurance.
• Do I qualify for a Preferred Risk Policy? This is a policy for homes in moderate-risk or low-risk areas. If you qualify, you will be able to buy a flood insurance policy for less money.
• Does my community participate in the National Flood Insurance Program’s Community Rating System?This is important because you might be able to buy cheaper flood insurance if it does.
• What will the policy cover? You want to know exactly what things inside your home the insurance will help you repair or replace if a flood damages them.
• What things will not be covered?
• Will the policy pay for damage to things on every floor of my home, or just the higher-level floors? Make sure to ask about damage to things in the basement, if you have one.
• Do you charge any agency fees? If so, what are they?
• Are there any other charges? All policies include certain fees and surcharges. Ask so you will not be caught by surprise.
• How can I pay for my policy? Ask about checks, credit cards, money orders, and cash.
• How will I renew my policy? You have to pay the insurer each year to keep your plan. Ask the agent how the insurance company will let you know when it is time to renew, and what you will have to do in response.

Your insurance agent will ask you some questions at the start to figure out your flood insurance coverage options. The answers also will help decide what price you will have to pay for the insurance.

• Where do you live?
• Do you own or rent your home?
• How many floors/levels does your home have?
• Have you done anything to lower the flood risk for your home?
• What is the value of the things you own in your home? Do not worry if you cannot answer this right away. You and the agent can discuss how to figure out this value.
• Do you have any receipts that show how much you paid for the things you own in the home?
• Do you have an elevation certificate? This question applies only to homes in high-risk areas. This certificate shows your home’s elevation, so the elevation can be compared with the estimated height that floodwaters will reach in a major flood. You may have to ask your landlord for this information.