Flooding in the Northeast: Homeowners' insurance and how to prepare before a disaster

As of June of this year, there have been nine confirmed climate disaster events with losses exceeding $1 billion each to affect United States. These events included one flood, seven severe storm, and one winter storm, according to the National Climate Data Center.

On Monday, millions of people in the Northeast are facing flood risks as heavy rainfall continues throughout Monday, according to the National Weather Service.

Homeowners dealing with repairs in the aftermath of the storm, or better still, before disaster strikes must stay abreast of their insurance policies and what they cover.

What does standard homeowners' insurance cover?

While standard homeowners’ policies cover a range of disasters, from tornadoes to lightning strikes to winter storm damage, they do not cover floods, earthquakes, maintenance damage and sewer backup, experts say.

Terry York, a Silver City, Miss., resident exits what's left of his home on March after Friday's deadly tornado.
Terry York, a Silver City, Miss., resident exits what's left of his home on March after Friday's deadly tornado.

“Earthquake and flood insurance are often overlooked types of policies that can leave families without any financial way to recover or rebuild,” says Leslie Chapman-Henderson, CEO of the Federal Alliance for Safe Homes, an advocacy group that works to strengthen homes from natural and human-made disasters.

Insurance: Does homeowners' insurance cover water damage

What can homeowners do when a natural disaster strikes?

First, contact a restoration company, says Tom Dolfay, CEO of Property Damage Appraisers, a company that assesses disaster-related damages for major insurance companies across the U.S.

Restoration companies assess the extent of the damage and determine the best course of action following significant damage from floods, fires, and other catastrophic events. They work with insurance companies and can assist in protecting the home from further damage.

Build connections with local restoration companies as soon as you buy a home so that when disaster strikes, you know whom to call. You might also get a better idea of what the repairs could actually cost if the insurance company tries to lowball you, says Dolfay.

Does your insurance cover "replacement cost" or "actual cash cost"?

Read the fine print and know the difference.

Replacement cost pays for the full amount needed to replace an item, whereas actual cash value insurance estimates depreciation, or the loss of value over time, and pays only the difference.

A homeowner with actual cash value insurance who needs to replace floors, walls, windows, appliances, roof, or lighting following a major event, could end up spending a substantial amount of money trying to rebuild their house. The actual cash value option could work better for items such as fine jewelry and art that can gain value over time.

PROPERTY INSURANCE: How much do you need?

GETTING A HOME POLICY: What are the best companies? 

Keep an inventory of what's in the house

"Know the make, model and brand of your major appliances and valuable items. Take pictures of everything (before disaster strikes) when you are calm, cool and collected, and email them to yourself so you can access them from anywhere," says Dolfay.

Insurance coverage limitations

Chapman-Henderson, of FLASH, suggests contacting more than one company for quotes and paying attention to coverage limitations and special riders a homeowner may need to cover high-value items like jewelry or heirlooms.

“Ask about the coverage limits, deductibles, and exclusions for each disaster risk common in your area,” she says.

Swapna Venugopal Ramaswamy is a housing and economy correspondent for USA TODAY.  You can follow her on Twitter @SwapnaVenugopal and sign up for our Daily Money newsletter here.

This article originally appeared on USA TODAY: Does home insurance cover flood damage? How can homeowners prepare