Flood Insurance

DEFINITION of 'Flood Insurance'

A financial instrument that protects real property owners from water damage to the structure and/or contents of their property. While flood insurance can be purchased through many different insurance companies, all policies are federally regulated so that the same policy costs the same amount no matter which company it is purchased through.

BREAKING DOWN 'Flood Insurance'

Because typical hazard insurance policies do not cover flooding, homeowners must purchase a separate policy if they want to be protected against flood damage. For properties in high-risk areas, lenders sometimes require mortgaged homeowners to carry flood insurance to protect the structure. It is up to the homeowner whether to purchase additional coverage for the property's contents, such as furniture and clothing.



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