Flood Insurance vs. Homeowners Insurance: Key Differences

Homeowners insurance usually covers water damage that starts inside your home. That includes a broken pipe, a malfunctioning dishwasher, or a leaking water heater. The damage is considered sudden and accidental, which is what your policy is designed for.

Your policy may also cover water damage from a roof leak caused by a storm, as long as the roof was in good condition. But it generally will not cover damage from water that enters your home from the ground, like a river overflowing or heavy rain pooling around your foundation. That is where flood insurance comes in.

The main difference is the source of the water. Homeowners insurance handles water that comes from inside your home, like a burst pipe. Flood insurance handles water that comes from outside, like a river overflowing or heavy rain soaking the ground.

Another difference is cost. Flood insurance typically costs more than the water damage endorsement on a homeowners policy, but the cost depends on your flood risk and the coverage amount you choose. Homeowners water damage coverage is often included in your standard policy, so there is no extra premium.

• Source of water: inside vs. outside
• Typically separate policies with separate premiums
• Flood insurance may have a waiting period
• Homeowners coverage is usually automatic
• Flood coverage is often required by lenders in high-risk areas

Start by reviewing your homeowners policy to see what water damage it covers. Look for exclusions related to floods, groundwater, or sewer backups. If your policy does not cover these, you may want to add a separate flood policy.

Consider your property's flood risk. If you live in a floodplain or near a body of water, flood insurance is likely a good idea. Even if you are not in a high-risk area, heavy rain can cause flooding, so check with your insurance agent about your options. Check your policy to understand your coverage.