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Why You Need Home Flood Insurance
Article 7 of 9 in Home Insurance and Disasters
Home flood insurance is available nationwide through many insurance companies. All private insurers write home flood insurance under a special agreement with the federal government through the National Flood Insurance Program (NFIP). This coverage is extremely important for those who are in areas subject to flooding since resulting damage is commonly excluded from coverage under all forms of standard homeowners insurance policies.
TIP: The Federal Emergency Management Agency (FEMA) also provides information on its website, so look there for specific details for flood coverage in your area.
In some cases, home flood insurance is required. If your home is in a flood zone that is considered high risk and you have a loan on the home, your mortgage company will more than likely require that you purchase home flood insurance. The maximum amount of insurance available through the National Flood Insurance Program (NFIP) is $250,000. It is not at guaranteed replacement cost, which means if your home damage cost more than the limit, it will not be paid as the damage limit is capped at the limit amount.
TIP: If you no longer have a loan on your home, you are not required to continue the flood insurance. However, you should consider keeping the insurance if you're in an area that has a high risk of flooding.
Even if you are not in a high-risk zone, you may want to consider purchasing a home flood insurance policy. Your home being in a safer zone does not mean you will not suffer from a flood. For example, the city of Nashville, Tennessee suffered a horrendous flood, but many areas were not considered to be in a high-risk zone causing many people and businesses that did not have flood insurance to pay for damages out of pocket.
How Much is Flood Insurance
The cost of flood insurance varies depending on where your home is. Like any home insurance premium rates, your flood insurance cost is based on how risky your home is to insure. The greater the likelihood of flood damage, the higher the costs. An insurance agent providing you a flood insurance quote would enter your address into the NFIP flood system and identify the zone for the address provided. Then, the agent will obtain the flood insurance premium for your home in accordance to your zone. Therefore, getting quotes from multiple insurance agents should result in the same flood insurance quote.
Home Flood Insurance Coverage
Home flood insurance covers your dwelling as well as personal property. Policy holders must pick a deductible for flood coverage just as for almost any other kind of insurance. The insured, however, can pick a different deductible for the building and for contents coverage. Flood insurance can be obtained as either a replacement cost or actual cash value policy; however, personal property and some building items such as carpeting are always adjusted on an ACV basis.
Most National Flood Insurance Program policies include Increased Cost of Compliance (ICC) coverage which applies when flood damage is severe. This coverage allows up to $30,000 to cover the cost of elevating, demolishing, or relocating a property if the local community declares it is "substantially damaged" or "repetitively damaged" by a flood (there are varying definitions for this criteria. Check your policy for its definition).
There are several things that are not covered by flood insurance:
- Damage caused by moisture, mildew, or mold that could have been avoided by the property owners.
- Currency, precious metals, and valuable papers such as stock certificates.
- Living expenses such as temporary housing.
- Property and belongings outside of a building such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs and swimming pools.
Make sure you know what your flood insurance coverage does and does not cover before you agree to any plan.
Flood Insurance Claims
If you have a home flood insurance claim call your agent or the insurance company. They will send you property loss forms to document all of your damaged or destroyed personal property. Make sure you take photos of any damage. Keep all receipts used to prevent further damage- temporary repairs, mold or mildew prevention or flood prevention expense such as sand bags. The insurance company will send an adjuster to inspect and document your loss. Make sure you review any check and adjuster repair estimate before accepting any payment or signing a damage waiver form.
When you are ready to shop for home insurance, find out whether or not flood insurance is something you need. Shop and compare flood and home insurance quotes to find the right policy for your needs. Click here to get started with a free home insurance quote today.