Does Auto Insurance Cover Flood and Water Damage?

Are Flood and Water Damage Covered by Insurance?

Flood insurance for your home doesn't cover vehicle damage. Comprehensive coverage covers most instances of water and flood damage to vehicles, helping you pay to repair or replace it (after meeting your deductible). It's the only type of auto insurance that covers weather-related damage.

This extra coverage is optional if you own your car outright, and, depending on your insurer, it might be packaged with collision coverage. If you've financed your car with an auto loan or lease, however, the lender or dealer might require this coverage to protect their investment.

If you live in a flood-prone area, consider adding comprehensive coverage before bad weather strikes. Once a big storm is forecast, insurers sometimes introduce "binding restrictions." This means no new policies or changes to existing policies until after the event has ended, so if you see a hurricane or heavy rainfall coming, it could be too late to add on coverage.

Is All Water Damage Covered?

Insurance with comprehensive coverage usually covers damage in these situations:

• Hail broke your windows or windshield and let in water and hailstones
• Flood water damages your car while parked in your driveway or on a street
• You drove through a large puddle or flooded street
• Hail in a storm damages your car, windshield or windows
• A snowstorm floods your vehicle
• A windstorm, rainstorm or tornado causes a tree or another object to fall on your car
• Your car has mold or rust damage from driving through flooded roads

Auto insurance usually won't cover:

• Water damage that accrued slowly due to a failure to maintain the car
• Damage due to preventable issues, like leaving a window open in a storm
• Damage to owner-installed electronics (such as a GPS device, stereo or scanner)

Note that if your vehicle is totaled from weather damage, comprehensive auto coverage should reimburse you for your car's value, minus your deductible. Some drivers run into problems if their insurer determines the cash value of the vehicle is less than what's still owed on the car.

Having gap insurance on your auto policy can cover the difference between the vehicle's value and what you still owe on your auto loan. If you bought a new car, the dealer may have automatically added optional gap insurance.

If you don't have this optional policy, you'll owe the loan's balance out of pocket. This is more common with new vehicles, since depreciation starts as soon as they're driven off the lot. Some insurers also offer loan/lease payoff coverage instead of or in addition to gap insurance, which is similar but could have different payout limits and requirements.

What to Do if Flood and Water Damage Are Not Covered

Your car insurance won't cover damages if you don't carry a comprehensive policy, or if you do but your specific situation isn't covered. If you need another way to pay for repairing or replacing your vehicle, here are some options:

• Tapping your emergency fund: A weather-damaged or destroyed vehicle is one of those moments emergency funds are made for. If you do have to take out money, aim to replenish it over time so you're prepared for life's next curveball.
• Borrowing from loved ones: It's not always ideal to borrow money from family and friends; it can create awkwardness and conflict. But sometimes, it can work if you think carefully about who to ask, how much to ask for and how you'll repay it. If they agree, always create a simple loan contract to make it official and provide assurance your loved one has legal recourse if you fail to pay. Just make sure to repay on time to keep your relationship intact and out of small claims court.
• Using a credit card: If you're low on options, consider putting some or all of the expense on your credit card with the lowest interest rate. Pay your balance as fast as possible to reduce interest charges. If you don't have a credit card with a low rate, or you'll need more than a few months to repay it, consider getting an intro 0% APR credit card. These often allow interest-free purchases for a year or longer, as long as you pay your balance before the much higher regular interest rate kicks in.
• Taking out a personal loan: If your car repair bill is steep, another option is to obtain a small personal loan. While some traditional banks no longer offer them, you can still find them at some banks, many credit unions and many online lenders.

How to Get New Car Insurance

You shouldn't have any trouble finding or adding comprehensive coverage unless your vehicle is considered high-risk, antique, classic, luxury, exotic or speciality.

If you don't have comprehensive coverage, you can't get a standalone policy for it. You'll have to add it to your existing auto insurance policy, which you can typically do at any time to protect your vehicle from future flood and water damage (unless a major storm is already on the way). Contact your insurer to find out the costs and terms of their comprehensive coverage.

If you do have a comprehensive policy, you might still look at other car insurance companies if your insurer has raised your rates after filing a claim, or you don't like their policies on covering damage claims.

Here are some tips for finding a new policy:

• Shop around. Comparison-shopping can result in major savings on insurance, so obtain quotes from several companies. Experian allows you to compare quotes from multiple auto insurers at the same time, in one place.
• Decide on coverage. Look at the costs of premiums and deductibles for different levels of coverage and decide what works for your budget. Some insurers may allow adding just comprehensive coverage, while others combine it with collision insurance. If you have a newer car that's financed, consider adding gap insurance.
• Review terms carefully. To avoid surprises, before choosing new car insurance, comb through the fine print so you know exactly what type of water damage is covered.

The Bottom Line

Car insurance isn't cheap, and it may be tempting to scrimp on your policy to save money. After all, insurance is a game of risk, and you might pay for comprehensive coverage and never use it.

Just remember that going with the cheapest option will save you money now. But if storms or a flood results in damage to your vehicle, you may find yourself in a financial crisis later. Paying for coverage upfront spaces out the cost, especially if you pay monthly premiums, and can protect you from future surprises Mother Nature throws your way.