Homeowners, and commercial property insurance policy ALL have standard exclusion for damage caused by a flood. But even with the exclusion - there is some coverage for damage caused by water.
First - "flood" will be defined as water that travels across the ground and gets into the house under the door, cracks in the foundation, basement window wells, etc. Don't think of rain as the source of the water either. If you live near a retention pond and the pond breaks and water rushes down the street into your house is a flood. Neighbors above ground pool that breaks and not only impacts you but at least 3 other homeowners can be considered a flood loss.
What is type of water damage is covered?
Water line in the house that breaks, water heater collapses, damage to your roof and water leaks in causing damage to your ceiling, or storm knocks out window and rain comes in thru window and causes damage - the insurance will provide coverage for all the damage that has been caused by these examples. In the case of a broken water line - it just won't repair the broken line....that is maintenance.
We strongly encourage families and businesses to consider coverage for Backup of Water (also known as sump pump coverage). If water gets into your home thru the sewer lines or a true sump pump pit, there is coverage that can be purchased to add coverage for an agreed amount of protection. Don't just think of heavy rains as the cause of the water thru the pipes either. We have had claims where the city sewer line collapses and water backs up into several homes causing damage.
But I don't live in a "flood zone" is the normal argument that we get from homes and businesses. Well the fact of the matter is, you probably do live in a "flood zone."
First, flood insurance is controlled by the United State Government - it is the only place that you can get the basic contract. For that reason, if your community has decided to participate in the National Flood Program - ALL properties will be rated into a zone. Property that is closest to water/streams are typically in an "A" zone while homes that are higher up the hill are in an "X" zone.
Next, its not a good contract, but it is the only one available. It will cover your structure at a limit you want. You have to add coverage for contents, but here is the first problem with the flood contract. It doesn't cover any contents in a basement. Here is the kicker....a basement is defined as anything that is below the main elevation level of the house - therefore - sunken living room, crawlspaces, and true basements there would be no coverage for contents.
Last problem with the flood policy is that should you be forced out of your house because of a terrible flood and your home is not habitable - there is no funds within the policy to get you into temporary housing and to cover any additional living expenses. You may say, well my homeowners has coverage for additional living expenses and you would be correct, except the homeowners excludes flood.