Does Flood Insurance Cover Loss of Use?

Floods, even small ones, can be disastrous to your home. Whether you’ve been displaced by a large-scale disaster like a hurricane, or you just need to wait for your home to dry out after a burst pipe, it’s very possible you need to stay somewhere else for a while before your house becomes inhabitable once again.

Loss of use is a regularly covered expense by your homeowners insurance policy when you suffer damage from a covered peril. Unfortunately, floods aren’t a covered peril, and loss of use likely isn’t included in your flood insurance policy depending on your provider. Let’s take a closer look.

Flood insurance plans from the National Flood Insurance Program don’t cover loss of use. Policies from the NFIP cover only direct, physical losses from floods, which includes damage from floodwater to the structure of your home and belongings inside it. The cost of additional, temporary living expenses, such as hotel stays and gas, aren’t directly caused by floodwaters, so they wouldn’t be covered.

Private flood insurance companies, on the other hand, offer more flexibility in their coverage. Some private insurers do cover loss of use in flood policies.

The NFIP is the largest flood insurance provider in the United States. It’s backed by the federal government and is available to anyone who wants flood insurance. NFIP policies contain strict limits on what they cover. They typically max out at $250,000 for building coverage and $100,000 for contents coverage per household.

Building coverage protects the structure of your home, like the floor, windows, and walls, as well as permanent features like built-in appliances and carpets. Contents coverage in NFIP policies protects your personal property, like electronics, furniture, and clothes, from direct damage from the flood.

Loss of use, which is a coverage normally found in homeowners insurance policies that enables your insurer to cover temporary expenses you incur when you’re displaced from your home while it’s being repaired from covered damage, doesn’t fall under either the building or contents category of NFIP flood policies. Thus, the NFIP doesn’t cover loss of use, additional living expenses, or any other damage not directly caused by the floodwaters.

Private flood insurance companies can cover loss of use. Their ability to account for risk and tweak policies more than the government-backed and standardized NFIP means private flood insurers offer different, and typically more, coverages in their flood insurance policies. They also may cost more.

Some additional coverages private flood providers offer that the NFIP can’t cover are for other structures on your property, replacement cost coverage instead of actual cash value, and loss of use coverage.

TypTap, an insurance company founded in 2016 that offers flood insurance in five states, covers loss of use, for instance. Their flood policies cover necessary increases in living expenses up to $5,000 after a covered flood. It can be used on anything that you’d need to maintain your normal household standard of living when you’re forced out of your home. 

If you’re a landlord and the flooded property was a rental property that had tenants, their loss of use can cover the lost rent while your tenants are forced to move out.

As we touched on earlier, loss of use in a homeowners insurance policy covers additional living expenses you incur when you’re forced to leave your home while it’s being rebuilt or repaired. You can get reimbursed for food, gas, storage fees, and hotel stays while you’re displaced.

While you might not find a private flood insurance company that covers all of that in their loss of use policies, it’s possible to find some loss of use coverage in flood plans. If you’re not satisfied with the strict limits and lack of options in an NFIP policy, we’d be happy to help you find flood insurance that works for you. 

Clovered exists to make insurance easier. We partner with the nation’s top insurance companies, and all you need to do for a quote is fill out a quick form. Then, let one of our licensed, experienced agents pair you with a flood policy from a private insurer.

NFIP flood insurance doesn’t cover any temporary housing or additional living expenses after a flood. As mentioned earlier, a private flood insurance policy may help you, or you may be eligible for separate FEMA assistance after certain disasters.

If you were displaced from your home by a hurricane, you may be able to invoke the loss of use policy in your homeowners policy. For example, if wind damage, as opposed to water damage, primarily caused extensive damage to your home and rendered it uninhabitable, your home insurance could kick in and cover your additional living expenses.

Also, the Federal Emergency Management Agency offers rental and shelter assistance for certain survivors of a disaster if they’re not insured. FEMA is the same governmental body that runs the NFIP. Although disaster assistance is separate from flood insurance, the goals of both are still to help citizens in need from floods.

If you’ve suffered a massive flood and you’re uninsured, FEMA may still be able to help.