Five Things to Understand About Flood Insurance
1) A standard homeowner’s policy does not cover flood damage
2) There is a 30-day waiting period to make a claim once you purchase flood insurance;
3) Flood insurance is not very expensive;
4) You don’t have to live in a flood zone to have flood damage;
5) Flood insurance policies have limits just like homeowners’ policies.
Most people are surprised to learn that their regular homeowners policy does not cover flood damage. If you live in a location that is highly prone to floods, your mortgage company may require you to carry flood insurance on your property if you have a note. According to government statistics, floods are the most common and the costliest natural disaster.
Homeowners Insurance Does Not Cover Flood Damage
Sometimes it’s a fine line between understanding what is flood damage and what is damage from a general rainstorm. The best way to describe flood damage is that if water touches the ground and then enters your home it’s considered a flood and only flood insurance will pay for those damages. Therefore, if you live in a flood zone and the water rises and starts pouring through your home, your homeowner’s policy will not cover that type of damage. However, if a tree falls on your roof during a rainstorm and heavy rains pour into your home from the ceiling that would be covered by your homeowner’s insurance. Water that comes from the sky and lands on the ground and then enters your home is considered a flood. If a pipe burst and causes water damage in your home that is generally covered as a sudden emergency under your homeowner’s policy.
You Cannot Wait for A Flood to Buy Flood Insurance.
Most flood insurance policies carry a 30-day waiting period. That means you cannot turn on the news and see that you are about to be flooded and call a flood insurance agent and purchase flood insurance to cover the imminent danger. Therefore, it is something that you need to consider in advance. Although not all regions are highly prone to flooding, one out of five flood claims come from moderate to low risk flood zones. And it is important to bear in mind that those are only the people that had flood insurance to make a claim. Therefore, many homeowners in those moderate to low flood zones sustained flood damage and had no coverage to cover their losses. I know that the news often reports that FEMA is coming in and government aid is on its way to people in the flood zones. It is important to note that usually that aid comes in the form of some type of government loan that you would have to pay back. It is generally worth investigating and I highly recommend that you look into whether you need flood insurance and the cost. The average cost of flood insurance is about $700 per year. Flood damage can often run into the tens of thousands of dollars.
The Cost of Flood Insurance
The cost of a flood insurance ranges from $200 per year to $1,300 per year with an average cost at about $700 a year. These costs vary depending on the level of risk meaning how prone your property is to flood. However, if your property is highly prone to flooding it is likely well worth the cost of flood insurance. There are many factors that both government programs and private insurance companies use to determine flood insurance rates. According to FEMA, the most important factors that influence your rates are:
- The Age of your Home
- The value of your home
- Whether or not you have a basement (finished basements often are not covered)
- The Location of your personal property
- The Location of your home’s lowest floor and its relation to the Base Flood Elevation
- The deductible you chose.
The most significant factor is how susceptible your home is to being flooded. When you’re being underwritten for flood insurance, the company will consider far more than just what city or state your property is located. They will generally access whether or not your home is in a FEMA-designated flood zone, and if so, how hazardous a flood zone. There are three types of flood zones that FEMA has designated known as the A, B, and C zones. For more information on the flood zones, see https://www.fema.gov/pdf/nfip/manual201205/content/16_maps.pdf FEMA has very specific zones throughout the country and you can order a map of your area on their website.
Not All Flood Claims Happen in The High-Risk Flood Areas.
It is an interesting statistic that one out of five flood damage claims come from low to moderate risk flood zone areas. This means that even if you are in a low-risk area you could still suffer flood damage depending on the level of storms that hit. With global warming and the drastic change in weather patterns it is really unknown and unforeseeable where flooding will occur. The lower risk area that you live in, the lower the cost of flood insurance.
Ninety percent of all-natural disasters in the United States involve flooding, and flood damage strikes frequently in low or moderate risk areas. Homeowner’s policies do not cover flooding regardless of the risk level of your property. You may think you are immune because you don’t live in a high-risk flood area. However, even if you don’t live in a high flood risk area, you can be susceptible to danger from a flood. It is a fact that 20 percent of all flood claims are filed in low to moderate flood risk areas. Therefore, you should know how to prepare for the possibility of a flood, know your flood insurance options and obtain adequate coverage.
Flood Insurance Policies Have Limits
Just like a traditional homeowner’s policy, flood insurance policies will have limits on the amount that they cover for your dwelling, as well as your personal property. If you do purchase a flood insurance policy, it is important to examine those limits and make sure that the limits that you are purchasing will cover the value of the property in your home as well as the structure of your home in the event of a total loss from flooding. If you’re going to purchase insurance, it is always important to make sure that you have coverage that would cover you in the event of the worst-case scenario. Know the value of your home and the contents in your home.
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