Are Walkout Basements Covered by Flood Insurance?

Legal Walkout Basement Exclusion

• Walkout basements are designed to offer an exit to the outside from the lower level of the house, but they are easily susceptible to foreseeable flood damage. Under the Federal Insurance Administration's regulations, a room located below the lower level of the house, "falls under the basement exclusion and it is still considered a basement," according to the court's decision in Nelson v. Becton, U.S. Court of Appeals, 8th Circuit.

Walkout Basement Use

• The use of the walkout basement or how that use is regarded by the local real estate industry has no bearing on the insurability of the basement. Courts have determined that federal law, not local realty definitions for occupancy walkout basement use, is controlling, and full flood insurance coverage can be denied. Only limited insurance coverage can be offered to the homeowner.

Limited Flood Insurance Coverage

• While homeowners who have walkout basements cannot obtain full flood insurance coverage, limited coverage for certain appliances and operating systems located within the walkout basement can be covered. For instance, electrical and plumbing systems as well as furnaces and water heaters can be covered by flood insurance. In addition, refrigerators, cooking stoves, central air conditioning systems, and built-in appliances like dishwashers are typically covered, according to the website FloodSmart.gov.