Flood Insurance

AAA

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.



RELATED TERMS
  1. Title Binder

    A temporary form of real estate insurance coverage related to ...
  2. Water Exclusion Clause

    A restriction in a homeowner's or renter's insurance policy that ...
  3. Windstorm Hazard

    The risk that a property will sustain losses due to strong winds. ...
  4. Catastrophe Hazard

    The risk of loss from a particularly destructive event, such ...
  5. Catastrophe Insurance

    Insurance to protect businesses and residences against natural ...
  6. Impound

    An account maintained by mortgage companies to collect amounts ...
Related Articles
  1. Home & Auto

    The Beginner's Guide To Homeowners' Insurance

    Discover everything new homeowners need to know before they sign on the dotted line.
  2. Home & Auto

    Understanding Lender-Required Flood Insurance

    Having to buy flood insurance shouldn't be a surprise. Find out what you need to know when purchasing or refinancing a house.
  3. Insurance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  4. Home & Auto

    4 Areas to Consider Roofing Material Types

    Roofing your home is very important, that’s why you should choose a roof specifically designed to handle your area’s climate.
  5. Insurance

    How to Shop for Home Insurance

    Tips for getting the best protection for your place and possessions.
  6. Insurance

    Tips for Insuring Your Salary

    Those with high incomes really can’t afford to be without disability insurance. Here's why.
  7. Insurance

    The Best Way to Insure Your Jewelry

    What you need to know to keep those baubles, bangles and beads safe.
  8. Insurance

    Who Needs Extortion Insurance?

    Insurance can help mitigate the financial damage of an extortion plot, but it’s important to read the fine print before taking out one of these policies.
  9. Insurance

    Do You Need Kidnap & Ransom Insurance?

    Americans working abroad – and high-profile individuals traveling frequently in kidnapping hot spots – should consider this type of protection.
  10. Insurance

    A Guide To Kidnap & Ransom Insurance

    Every year, thousands of people are kidnapped for ransom all over the world. This insurance offers protection – and peace of mind.
RELATED FAQS
  1. What are the main factors that impact share prices in the insurance sector?

    The main factors that impact share prices in the insurance sector are interest rates, earnings and actuarial risk. In the ... Read Full Answer >>
  2. Why do insurance policies have deductibles?

    Insurance policies have deductibles for behavioral and financial reasons. Moral Hazards Deductibles mitigate the behavioral ... Read Full Answer >>
  3. Can I buy insurance to reduce unlimited liability in a partnership?

    Partnership insurance is actually quite common. Most of the time, partners buy insurance to safeguard against the possibility ... Read Full Answer >>
  4. Why should value investors consider the insurance sector?

    Insurance companies receive steady cash flows for years with irregular payouts. Following these payouts, insurance companies ... Read Full Answer >>
  5. What are the major categories of financial institutions and what are their primary ...

    In today's financial services marketplace, a financial institution exists to provide a wide variety of deposit, lending and ... Read Full Answer >>
  6. How much do changes in interest rates affect the profitability of the insurance sector?

    Interest rate risk for insurance companies is a significant factor in determining profitability. Although rate changes in ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  2. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  3. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  4. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  5. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  6. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!