Keeping your belongings in basements can be risky due to a quirk in flood insurance.

• A separate flood insurance policy is necessary to protect against flood risk, as homeowners and renters insurance do not cover it.
• A majority of Americans obtain flood insurance through the National Flood Insurance Program managed by FEMA.
• Typically, NFIP policies do not cover personal property and items kept in basements. However, private insurers may provide more coverage, but this varies by company and policy.
• Climate change is predicted to increase the occurrence and expense of severe weather and flooding.

Basements in America are a diverse mix of personal belongings, used as storage areas, man caves, game rooms, wine cellars, home bars, and additional living spaces.

Most, if not all, of your belongings in the basement are unlikely to be covered by your flood insurance policy if it floods.

Experts predict that as climate change progresses, storms and resulting flood damage will become more severe, potentially leading to significant consequences for policyholders.

According to Peter Kochenburger, an insurance expert and visiting law professor at Southern University Law Center, while you can store anything in your basement, it won't be covered by flood insurance.

What is flood insurance?

The Insurance Information Institute states that flooding is the "most frequent and expensive natural disaster in the United States."

Since 1998, 99% of U.S. counties have experienced a flood, and over 40% of flood insurance claims come from areas not considered high risk by FEMA.

The Federal Emergency Management Agency stated that 90% of annual disaster damage in the U.S. is caused by flooding, with just an inch of water capable of causing approximately $25,000 in damage to a property.

But homeowners and renters insurance policies don’t cover flood damage.

To protect against physical damage caused by floods, consumers must purchase separate insurance. This can happen due to storm surge, heavy rainfall, or an overflowed body of water like a lake or river.

Experts said that while homeowners insurance may cover water damage caused by burst pipes, sump pump backups, and water entering from the ceiling due to a collapsed roof, insurers may require consumers to purchase additional coverage beyond the policy's basic terms.

Experts stated that the majority of individuals with flood insurance obtain it through the federal government, specifically through FEMA's National Flood Insurance Program.

At the end of 2023, approximately 4.4 million Americans had residential NFIP policies, totaling $1.2 trillion in coverage, according to FEMA.

On average, only 30% of U.S. homes in high-risk flood areas have flood insurance, according to the University of Pennsylvania's Wharton Risk Center.

The NFIP policies provide coverage of up to $250,000 for building structure and a maximum of $100,000 for personal property.

According to FEMA data, nearly 21,000 policyholders filed a claim in 2023, with an average payment of almost $46,000.

In 2019, the average annual flood insurance premium was $700, according to the statement.

Climate change may result in significant financial losses. Term life insurance is frequently the most suitable option. Homeowners policies typically do not cover "mysterious disappearances."

According to the Insurance Information Institute, private insurers provide flood policies and may offer more comprehensive coverage than FEMA's policies.

In 2020, there were 58 private companies offering flood insurance, and in 2022, the top five by premiums were American International Group, Zurich Insurance Group, Assurant, AXA, and Berkshire Hathaway, according to the group.

What items aren’t covered in a basement?

Basement coverage “is limited” through NFIP policies, FEMA said.

Any area of a building with a floor below ground level on all sides, including sunken living rooms, crawlspaces, and lower levels of split-level buildings, may be considered a basement by the agency.

Its flood policies exclude the following items from coverage in a basement:

• “Personal property” like couches, computers, or televisions
• Improvements to basements, including finished flooring, walls, bathroom fixtures, and built-ins.
• Generators (and similar items)
• Certain dehumidifiers

FEMA stated that items stored in a basement, which are not connected to a power source, are not covered.

Kochenburger advised consumers worried about flood risk and insurance coverage to avoid storing their belongings in basements. Instead, they should move their items to a storage unit or higher ground.

These basement items are included with an add-on

FEMA stated that only if NFIP policyholders purchase additional "contents coverage," which is optional, and if connected to a power source, the following basement items are covered.

• Clothes washers and dryers
• Air conditioners (portable or window units)
• Food freezers and the food in them (excluding walk-in freezers)

The American Property Casualty Insurance Association's vice president, Don Griffin, stated that private insurance policies may provide broader coverage for basements, but this can vary among insurers.

He mentioned that an add-on to a homeowners insurance policy, such as coverage for water backup from drains, could be beneficial.

Since the mid-1970s, the percentage of new single-family homes with full or partial basements in the U.S. has decreased by more than half, from 45% to 21%, according to U.S. Census Bureau data from 2022.

FEMA unveiled a plan to revise its NFIP program and possibly improve basement insurance coverage for clients on February 6th.

Under the current Dwelling Form, policyholders with basements are often taken aback by the limited coverage provided.

Griffin stated that it may take over a year for consumers to witness these changes being implemented.

What items are included in a basement?

According to Kochenburger, the main concern of flood insurance is the building itself.

FEMA stated that NFIP policies protect building and structure in basements.

• Central air conditioners
• Fuel tanks and the fuel in them
• Furnaces and water heaters
• Sump pumps, heat pumps, and well water tanks and pumps
• Electrical outlets and switches
• Elevators and dumbwaiters
• Certain drywall
• Electrical junction and circuit breaker boxes
• Stairways and staircases attached to the building
• Foundation elements and anchorage systems required to support a building

FEMA announced that policyholders may be eligible for compensation to cover expenses related to floodwater removal, mold and mildew treatment, and interior foundation drying.

To expedite the claims process during flooding incidents, the NFIP mandates that the manufacturer, model, serial number, and capacity of equipment in your basement, such as furnaces, central AC units, and appliances like freezers, washers, and dryers, be documented.

According to FEMA, policyholders should review their flood insurance policy for a detailed list of covered items and expenses.

‘Where it rains it can flood’

Flood risk is only expected to worsen due to global warming.

The Fifth National Climate Assessment reports that extreme weather events, including heavy rainfall, hurricanes, and floods, cost the U.S. approximately $150 billion annually, with their frequency and severity increasing.

According to the 2023 report issued by the federal government every four to five years, it is predicted that the sum will increase in the near future.

From 1983 to 2002, the U.S. experienced 96 billion-dollar weather disasters, totaling $546.3 billion in damages. In the following two decades, from 2003 to 2022, the number of disasters increased to 244, with a total cost of $1.95 trillion, according to Pew Charitable Trusts.

The Fifth National Climate Assessment predicts that annual losses from flooding will increase by 61% by the year 2050.

Griffin stated that there is a discrepancy between the number of flood-insured properties and those at risk.

A 2020 report by the First Street Foundation states that 14.6 million U.S. properties are at "substantial risk" of flooding, with 5.9 million (and their owners) underestimating their risk because they're not located in a designated FEMA Special Flood Hazard Area.

Flooding occurs where it rains," Griffin stated. "It's almost everywhere.