Flood Insurance

Many professional artists and home owners mistakenly assume that the same insurance policy that covers them for fire, theft, and other perils also covers them for flood damage. While a typical business insurance, homeowners' insurance, or renters' insurance policy covers water damage as a result of wind or other physical damage to your structure, it is important to know that it generally does not cover damage from floods or "rising water."

Nationally about 50% of property owners in areas at high risk of flooding have flood insurance. The government defines a high risk area as one in which there is a 1% chance of flooding in any given year. While this is commonly called a "100 year" flood zone, it really means that you have a 25% chance of flooding during the course of a typical mortgage. And, the National Flood Insurance Program reports that 20% of damage claims it receives are from property owners in areas with low to moderate flood risk. 

The primary source for flood insurance is the National Flood Insurance Program (NFIP) underwritten by the federal government and administered by the Federal Emergency Management Agency (FEMA). The policy is purchased through private insurance brokers, and a good place to start is with the agent that handles the insurance on your business or home. If you have a mortgage and live in a high risk zone, there is a fair chance that you already have some coverage - many lenders require it. However, the lenders usually require only enough coverage to protect their investment. You may have no coverage for your equity or for the contents of your building. Worse yet, if you are not covered and are flooded, you may still be liable for the mortgage payments on a building you cannot use.

There have been many calls for flood insurance to be included in all property insurance plans, and maybe one day it will. But for now, you must purchase a separate flood insurance policy if you want protection against flood damage. While it is theoretically possible to purchase privately underwritten flood insurance, it is usually much more expensive than that available from the NFIP.

Artist's studio washed down the street in Tropical Storm
Irene flooding in Shelburne Falls, MA. Photo: John Sendelbach

Who Can Buy Flood Insurance?

Flood insurance through the NFIP is not available everywhere. Participation in the program requires an agreement between the federal government and local governments to place limits on construction in flood-prone areas. If your community has chosen not to participate or fails to comply with the regulations, your only options are to purchase (usually more expensive) insurance from a private carrier or go without insurance.

National Flood Insurance is available to homeowners for first and second homes up to a maximum of $250,000. Homeowners and renters can purchase flood coverage for contents of a building up to $100,00. Businesses can get up to $500,000 flood insurance on a building and up to $250,000 on the contents. Contents of the building is not automatically covered - you must declare a specific amount and a separate premium is charged. If you need more insurance than that you will have to purchase the additional insurance through a private carrier.

You must purchase a separate policy for each structure you wish to insure. The exception is that a detached garage can be covered for up to 10% of the policy, but only if it is used as a garage for storage. If your studio is in the garage, it would not be covered, nor would the contents unless you purchase a separate policy.

How Much Does it Cost?

The cost of flood insurance is based upon the risk of your property flooding. You can get an instant estimate of your flood risk and insurance premiums at www.FloodSmart.gov

National Flood Insurance Program Insurance Coverage

What is Covered ?

Your insured building (or insured contents) must be affected by 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 (at least 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

  • The insured building:

    • May be insured for either Replacement Cost (cost to repair or replace at time of loss without deduction for depreciation) or Actual Cash Value (ACV) (cost to repair or replace less physical depreciation based on the age and condition of the item)

    • May be a manufactured building or travel trailer. If in a special flood zone it must be properly anchored to a foundation

  • Contents (must be insured under a separate policy)

    • May only be insured for Actual Cash Value (ACV)(see above)

    • Flood Insurance on building contents is available to renters (studio contents should be covered under a commercial policy)

  • Mold or mildew may be covered if it is not the result of conditions that existed before the flood AND you take reasonable and appropriate actions to reduce damage after the flood.

  • Mudflow

  • Debris Removal

  • Loss Avoidance Measures: up to certain limits for sandbagging, etc. when a flooding is imminent.

  • Property Removed to Safety: up to limits reasonable expenses to protect property from flooding provided certain conditions are met.

  • Increased Cost of Compliance: to comply with a State or local floodplain law affecting reconstruction of a flood-damaged structure.

What is Not Covered?

  • Damage to a basement or items in a basement (except items that service the building, such as furnaces and electrical boxes, and a few items like washers, dryers, and freezers. A basement is defined as a room or any portion of a room (ex. sunken living room) that has its floor below grade on all sides.

  • Detached buildings unless they are covered by a separate policy. Detached garages may be included up to 10% of the value of the main structure only if used solely as a garage or for storage.

  • Landscaping

  • Backup from sewer or drain

  • Additional Living Expenses or Loss of Use or Business Interruption

  • Losses caused by earth movement even if the result of a flood including earthquake, landslide, land subsidence (sinking), sinkholes, gradual erosion.

  • Personal property not inside the insured building

  • Recreational vehicles other than travel trailers

  • Currency, accounts, and other valuable papers

  • Fences, retaining walls, bridges, docks.

This summary covers only the major exclusions. For more information a sample policy may be downloaded.

Be sure to talk to an agent to be sure you know what is covered, what is not covered, and your obligations to take action if you are flooded. Do not assume that your tools, materials and other business assets will be covered. You may need to insure those separately under a commercial policy, even if you work in your home or an attached structure. Separate structures and their contents used for studios will always need to be covered under separate commercial policies.


Floodsafety.com has an excellent guide to Assessing Your Flood Risk.

www.Floodsmart.gov is the official website of the National Flood Insurance Program (NFIP). The site has much helpful information about flood risk and insurance. Here you can find your risk, calculate sample premiums, and answer many of your questions about flood insurance.

National Flood Insurance Program Summary of Coverage is a 4 page pdf flie that covers the most important aspects of a flood insurance policy.

A sample flood insurance policy is available at: http://www.fema.gov/pdf/nfip/manual200705/15pol.pdf

The Institute for Business and Home Safety has resources for assessing and lessening risk of flood damage.

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