Flood insurance is coverage for a loss of property due to a water damage caused by a flood. A flood can be caused by a rapid accumulation of rain, hurricane, tornado, snow melt, or mudflows. Most home or business owners believe they will never need this type of insurance. However, flooding can cost a home or business owner thousands of dollars in damage.
Are You at Risk for a Flood?
Flooding can happen anywhere but some land areas are more high-risk than others. To help the home or business owner understand where these areas are located, the Federal Emergency Management Agency (FEMA) maintains up-to-date flood maps. FEMA conducts topographic studies and gathers information on storm tides, river flow, and rainfall to determine high-risk areas. FEMA continues to update maps so the home or business owner can make informed decisions about protecting their property.
Flooding can happen in high-risk areas, moderate-to-low risk, and undetermined-risk areas. High-risk areas have a 1 in 4 chance of flooding. If a home, building, or land is purchased or rented in this area, the consumer is required to buy flood insurance. In the moderate-to-low risk and undetermined-risk areas, the consumer is not required to buy flood insurance, but it is highly recommended!
Purchasing Flood Insurance
Flood insurance can be purchased through a private insurance company or through the National Flood Insurance Program. Flood insurance purchased through the private sector can be quite expensive and can have many limitations on coverage. However, the National Flood Insurance Program is backed by the U.S. Government and provides coverage that will enable the home owner or business owner to be able to get back on their feet after major flooding. This insurance can provide coverage for up to $250,000 for property and $100,000 for belongings.
The National Flood Insurance Program was started by Congress in 1968. This program is basically funded by the taxpayers' dollars and the most important benefit of this program is that helps home and business owners get coverage at a reasonable price if they live in a covered community.
Insurance through the National Flood Insurance Program can be purchased through property and casualty insurance agents. However, in order for home and business owners to be eligible for this program, they must live in a community that participates in the National Flood Insurance Program. The community must prove that they meet FEMA requirements to reduce flooding. The rates are based upon the date and type of construction of the business or home.
What You Should Know About Flood Insurance
When looking for flood insurance, the prospective buyer needs to consider the following items when searching for flood insurance:
- If the water damage is caused by frozen pipes, toilet overflows, or a leaky swimming pool, it may not be covered by a flood insurance policy.
- Landscaping such as flower or vegetable gardens, and special trees is usually not covered in flood insurance.
- Living expenses such as renting a hotel room until property is fixed is not covered in a flood policy.
- A flood policy will not cover basements or contents in a home or business.
- After flood insurance is purchased, the home or business owner must wait 30 days before the policy will take effect.
Flood insurance policies have two different types of coverage, building and "content," meaning your personal belongings. Building coverage typically covers water damage to the following: the building (home), foundation, plumbing and electrical system, water heater, carpeting, central air conditioning system, furnace, built-in appliances, cooking stove, and refrigerator. The contents in the home or building that are covered under this policy include the following: curtains, portable microwaves and dishwashers, clothing, furniture, washers and dryers, electronic equipment and many other items.
Flood insurance is an insurance that many home or business owners cannot afford to be without. Flood insurance can be purchased through the private sector or through the National Insurance Flood Program. Policy premiums are based upon locations, building structures, and type of coverage wanted by the home or business owner. Having the right coverage is the lifeboat for the home or business owner.
