Flood Insurance in Maryland: What You Need to Know Before the Water Rises

Flooding can happen almost anywhere. A home does not need to be beside a river, stream, or coastline to experience serious water damage. Heavy rainfall, overwhelmed drainage systems, rapid snowmelt, new construction, and water collecting in low-lying areas can all cause flooding.

Unfortunately, many property owners only discover one of the most important facts about flood insurance after damage occurs: most standard homeowners and renters insurance policies do not cover flooding.

According to the National Flood Insurance Program, just one inch of floodwater can cause approximately $25,000 in property damage. Without a separate flood insurance policy, much of that cost may have to be paid out of pocket.

Understanding what flood insurance covers, what it excludes, and when coverage begins can help Maryland homeowners, renters, and business owners make informed decisions before a storm or flood warning arrives.

What Is Considered a Flood?

People often use the word “flood” to describe any unwanted water in a home, but insurance policies look closely at where the water came from and how the damage occurred.

Under the National Flood Insurance Program, or NFIP, a flood generally involves a temporary condition in which normally dry land is covered by water. The flooding must affect at least two acres of land or two or more properties, one of which is the policyholder’s property.

Flooding may result from:

• Overflowing rivers, streams, or other bodies of water
• Heavy rainfall and surface water accumulation
• Storm surge
• Rapid snowmelt
• Mudflow, when covered under the policy definition
• Water runoff caused by changes in surrounding land or development

A burst pipe inside your home is not normally considered a flood. That type of water damage may fall under homeowners insurance, depending on how it happened and the terms of the policy.

Sewer and drain backups also require careful attention. An NFIP policy may cover a sewer backup when it is directly caused by a qualifying flood. A backup caused by a clog, mechanical failure, or another non-flood event generally would not be covered by flood insurance. Separate water backup coverage may be available under a homeowners policy.

Does Homeowners Insurance Cover Flood Damage?

Most standard homeowners insurance policies exclude damage caused by flooding. The same is generally true of renters insurance and many commercial property policies.

Homeowners insurance may cover certain types of sudden and accidental water damage, such as damage from a burst pipe or an appliance leak. However, it typically will not cover water that enters a property because of rising surface water, an overflowing creek, storm surge, or widespread flooding.

Flood insurance is designed specifically for direct physical damage caused by a qualifying flood.

You Can Face Flood Risk Outside a High-Risk Flood Zone

A flood zone is used to describe an area’s level of flood risk. It is not a boundary between properties that can flood and properties that cannot.

According to FloodSmart.gov, almost one-third of NFIP flood insurance claims come from outside designated high-risk flood areas. This means a property can be located in a moderate-risk or lower-risk area and still experience costly flooding.

Flood maps are valuable tools, but they cannot predict every storm, drainage problem, construction-related change, or localized flood. Maps may also change as communities develop and new risk information becomes available.

Even if a lender does not require flood insurance, property owners should consider:

• The property’s elevation and drainage
• Nearby streams, creeks, ponds, or low-lying land
• Previous flooding in the neighborhood
• The amount of rainfall the area can receive
• Nearby construction or changes in land use
• Whether the property has a basement or below-grade living space
• How much it would cost to repair the property and replace damaged belongings

What Does Flood Insurance Cover?

Coverage depends on the policy. Under an NFIP policy, coverage is divided into two main categories: building coverage and contents coverage.

Building Coverage

Building coverage can help pay for direct flood damage to the physical structure of an insured home. Covered property may include:

• Foundation walls and anchorage systems
• Electrical and plumbing systems
• Furnaces and water heaters
• Central air-conditioning equipment
• Permanently installed cabinets and bookcases
• Built-in appliances
• Permanently installed carpeting
• Staircases
• Well-water tanks and pumps
• Certain detached garages

For residential properties, NFIP building coverage is available up to $250,000.

Contents Coverage

Contents coverage protects eligible belongings inside the insured building. It may cover:

• Furniture
• Clothing
• Electronics
• Curtains
• Washers and dryers
• Portable air-conditioning units
• Microwave ovens
• Rugs and certain carpeting
• Some artwork and other valuable items, subject to special limits

NFIP contents coverage is available up to $100,000 for residential properties.

One detail that is easy to miss is that building coverage and contents coverage are typically purchased separately. They also have separate deductibles. Having coverage for the structure does not automatically mean all personal belongings are insured.

What Flood Insurance May Not Cover

Flood insurance provides important protection, but it does not cover every flood-related expense.

A standard NFIP policy generally does not cover:

• Temporary housing or additional living expenses while a home is repaired
• Cars and most self-propelled vehicles
• Landscaping, trees, fences, patios, decks, and swimming pools
• Currency, precious metals, and valuable papers
• Financial losses caused by business interruption
• Damage caused by moisture, mold, or mildew that could have been prevented
• Personal belongings and improvements in a basement, except for specifically covered items

Private flood insurance policies may offer different coverage, limits, or exclusions. Policy terms should always be reviewed carefully before purchasing coverage.

The Basement Coverage Limitation Many Homeowners Do Not Know About

Flood insurance coverage for basements is limited under the NFIP.

The NFIP generally defines a basement as an area with a floor that is below ground level on all sides. This definition can include some lower levels of split-level homes, even when homeowners do not think of the area as a traditional basement.

Certain essential building equipment may be covered in a basement, including:

• Furnaces and water heaters
• Electrical outlets, switches, and circuit breaker boxes
• Central air-conditioning units
• Sump pumps
• Well-water tanks and pumps
• Foundation elements
• Stairways attached to the building

However, finished walls, finished flooring, bathroom fixtures, furniture, televisions, computers, and many other personal belongings stored in a basement may not be covered.

Homeowners with finished basements should discuss these limitations with an insurance professional. It is important to understand how much of the investment in that space could remain uninsured following a flood.

Six Flood Insurance Facts That May Surprise You

1. Most NFIP policies have a 30-day waiting period

NFIP flood insurance usually does not become effective immediately. In most cases, coverage begins 30 days after the policy is purchased.

There are limited exceptions, including certain policies purchased in connection with making, increasing, extending, or renewing a mortgage. Because of the waiting period, purchasing coverage after a major storm appears in the forecast may be too late.

2. Your belongings may be insured for their depreciated value

Under an NFIP policy, personal property is generally settled at actual cash value. This means depreciation may be deducted based on an item’s age and condition.

The amount paid for a damaged television, sofa, or appliance may therefore be less than the cost of purchasing a new replacement.

3. Federal disaster assistance is not a substitute for insurance

Federal assistance is generally available only when a presidential disaster declaration is issued. Many flood events do not receive that designation.

Assistance may also come in the form of a loan that must be repaid. Flood insurance can respond to a covered loss without requiring a presidential disaster declaration.

4. Renters can purchase flood insurance

A landlord’s insurance protects the building, not a tenant’s belongings. Renters living in participating NFIP communities can purchase contents-only flood insurance for eligible possessions.

Standard renters insurance typically excludes flood damage, so tenants may otherwise have to replace damaged furniture, clothing, and electronics themselves.

5. Flood insurance can be purchased before a lender requires it

A mortgage lender may require flood insurance for certain properties in high-risk areas. However, homeowners outside those areas can still purchase coverage voluntarily.

Waiting until a lender requires insurance can leave a property exposed to flood risk that already exists.

6. NFIP and private flood insurance are not always the same

NFIP policies follow federal program rules and coverage limits. Private flood insurance may offer different limits, waiting periods, deductibles, valuation methods, or additional coverages.

Neither option is automatically right for every property. The policy should be evaluated based on the home’s value, flood exposure, contents, mortgage requirements, and the homeowner’s financial situation.

How Much Does Flood Insurance Cost?

There is no single price for flood insurance. Premiums can vary significantly from one property to another.

NFIP pricing considers factors such as:

• The property’s location
• Distance from a potential flood source
• Type and frequency of flooding in the area
• Elevation
• Building design and construction
• Cost to rebuild the property
• Selected coverage limits
• Deductible amounts
• Previous flood claims

A property outside a high-risk flood area may cost less to insure than a property with greater exposure, but a quote is needed to determine the actual premium.

Some risk-reduction improvements may also affect pricing. Elevating utilities, installing flood openings, or providing an elevation certificate may help in certain situations.

Protecting Your Maryland Property Starts With Understanding the Risk

Maryland properties can face flooding from heavy rainfall, overflowing waterways, storm surge, poor drainage, and rapidly accumulating surface water. Even a property that has never flooded before is not guaranteed to remain flood-free.

The team at Insurance One Group can help you review your property, understand available flood insurance options, and compare coverage based on your needs. A conversation now can help prevent an unexpected coverage gap when severe weather arrives.

Contact Insurance One Group today to discuss flood insurance for your home, rental property, belongings, or business.

Frequently Asked Questions About Flood Insurance

1. Does homeowners insurance cover flooding?

Most standard homeowners insurance policies do not cover damage caused by flooding. A separate flood insurance policy is generally needed for damage caused by rising water, surface-water accumulation, storm surge, or overflowing waterways.

2. What does flood insurance cover?

Flood insurance can cover direct physical damage to an insured building and eligible belongings caused by a qualifying flood. Building and contents coverage are usually separate, and exclusions and coverage limits apply.

3. Do I need flood insurance if I am not in a flood zone?

Every property is located in a flood zone, although some zones have a lower mapped risk than others. Flood insurance may not be required by your lender if you are outside a high-risk area, but flooding can still occur. Almost one-third of NFIP claims come from outside high-risk flood areas.

4. How much does flood insurance cost?

The cost depends on the property’s location, flood exposure, elevation, construction, replacement cost, coverage limits, and deductible. The best way to determine the cost is to request a quote based on the specific property.

5. How long is the waiting period for flood insurance?

Most NFIP flood insurance policies have a 30-day waiting period before coverage becomes effective. Limited exceptions apply, including some policies purchased in connection with a mortgage transaction. Private policies may have different waiting periods.

6. Does flood insurance cover basement damage?

NFIP basement coverage is limited. Certain essential systems and equipment may be covered, but finished walls, flooring, furniture, electronics, and many other belongings may not be. Homeowners should review the specific basement provisions of their policy.