Why don't most homeowner's insurance include compensation for water & flood damage?

Question

Why don't most homeowner's insurance include compensation for water & flood damage?

Answer 1

WHY??

Because, if private insurers were allowed to underwrite flood risks (charge premium to cover expected losses) then there would be large areas of the US where NO ONE would write any homeowners policies just to avoid the flood risk (like, the ENTIRE East Coast & Gulf of Mexico).  

If insurers were forced to write in all area, the average cost of homeowners insurance would skyrocket due to the increased exposure OR every insurer would leave the market; then we'd have to create a National Homeowner Insurance Plan.

Answer 2

Most home owners policies don't include insurance for Natural Disaster; flood, tornadoes, earth quakes and so on.

You can purchase a rider on your insurance for flood. Sometimes you have to if you're in a flood zone.

Answer 3

Floods are almost universally excluded on homeowner's policies.  You would need to purchase federal flood insurance to protect against this. Some states allow insurance to add this coverage through an additional endorsement.

Homeowner's policies DO cover water damage from a sudden and accidental loss such as a pipe bursting (assuming you maintained proper temperature within the house to prevent this)

Answer 4

If they did, the only people who would buy it would be people who lived near a river or large body of water. One of two things would then happen. The insurers would literally be flooded with claims and go out of business. Or they would charge so much money that nobody would buy it. Bottom line, people need to stop building in areas prone to flooding. Why people want to rebuild all the flooded areas in New Orleans makes absolutely no sense to me.

Answer 5

Water damage generally is, such as your water line breaks and floods your house.  Flood insurance is an add on.  Why?  I would guess the cost is a lot more in flood areas so they have to check out your property to insure it.

Answer 6

USA Homeowners Insurance companies don't include flood damage. You need to purchase flood and earthquake insurance separately. Most insurance companies offer this type of coverage. They differ from coverage for other disasters. For example, earthquake insurance covers a percentage of the damages instead of a dollar amount. Talk to your insurer to get the specifics.

Answer 7

In the U.S., no homeowner's insurance includes flood damage.  You have to get separate flood insurance.  "Water damage" would depend on what you mean.

Answer 8

According to the U.S. government, virtually every part of the United States subject to flooding. Some areas are more susceptible to flooding than other areas, of course. The areas most at risk are known as Special Flood Hazard Areas. Because floods cause widespread damage, private insurers cannot profitably insure against their risk. To prevent floods from wiping out the assets of the millions of Americans who live in flood zones, the U.S. Congress enacted the National Flood Insurance Act of 1968, establishing the National Flood Insurance Program (NFIP). Funded with premiums from homeowners and able to borrow against the national treasury, the NFIP offers the only kind of flood insurance available in the United States. Optional in some areas, flood insurance is mandatory for homeowners who live in Special Flood Hazard Areas. Despite the fact that flood insurance requirements are disclosed when a person purchases a home, the NAIC found that 33 percent of respondents wrongly assumed that their homeowners insurance covered flood damage.