Your insurance policy contains an exclusion for damage from this peril. If you live on a flood plain, you will need to have a flood insurance policy in addition to order to cover this peril.
It also means that things that are construed by a person to be a flood, such as a basement that is full of water as the result of an issue with plumbing, are not floods per the definition and are covered by your insurance policy. In addition, the water damage has the potential to cause a mold infestation. Depending on the nature of the damage, there may be exclusions and limitations in your insurance policy that will preclude or limit coverage with regard to water damage and mold. If the insurance company determines that the damage falls into a category where coverage is precluded, they will deny the claim. If coverage is limited, the proceeds from your insurance company may not be enough to repair the damage – especially if they do not take into account the quality of the materials damage and base their figure on the lowest quality materials possible.
Additionally, not only is the building damaged as the result of the damage done by a flood, or any kind of major water damage, the contents of the building are damaged as well. Your insurance company will require documentation of the loss of personal property, and if you supply documentation that is not acceptable to them, they will not pay you for the damaged property.