Guide to flood insurance

A flood insurance policy is a necessity when your home is near a flood zone. Purchasing a flood policy helps to protect properties against flood risks. The policy covers external flood-causing damages like snowstorms, heavy rain, melting ice, and storm levees.

In 2019, $ 52,000 was the average payout on the flood chain from the National Flood Insurance Program(NFIP). One might think since there has been no big puddle around, the area will experience no flood, but that should not be a factor to consider before getting a flood policy.

Flood Insurance

Flooding is the excessive flow of water onto dry land. It is one of the most widespread natural disasters on earth. An insurance policy covers property from flood-related damage. Most people misplace with homeowners insurance, but they are quite different because a homeowner’s policy does not cover flood damage from torrential rain and hurricanes. Flood insurance covers problems like storm surges, flash floods, and inland flooding.

When one buys flood insurance, it does not become active immediately. Most insurance companies have a 30-day waiting period like NFIP meaning that if a flood occurs during the waiting period, they give no coverage while some companies like Zurich Residential have no waiting.

If your property got damaged as a result of the flood, once you file a report, your insurance company and you get covered up immediately to your policy limit.

Types of flood insurance

Initially, NFIP was the only means to purchase flood insurance but in the last few years, private companies started offering more options.

National Flood Insurance Program (NFIP)

The National Flood Insurance Program gives federally supported access to homeowners. NFIP caps up to $250,000 for dwelling coverage and $100,000 for content coverage. It is readily available to any homeowner.

A business owner can also purchase an NFIP policy for up to $00,000 for both building and content coverage. Write your own (WYO) policy is an NFIP program that insurance companies use to issue insurance for flood.

Private flood insurance

As the name implies is done by private companies meaning they receive no federal government support rather they depend on reinsurer or premium money. It repairs damages to your home structures and their contents.

Private insurance policies offer high policy limits which can be of advantage to those with expensive properties who have little or no waiting time.

What Does Flood Insurance Cover?

There are two parts, namely;

  • Dwelling coverage
  • contents coverage

One can purchase just the two or both depending on your choice and the company you’re getting the coverage from.

Dwelling coverage

Dwelling coverage is an important type of coverage, it is advisable to have one because it provides coverage to all your home structures whether built-in or attached structures. It practically rebuilds houses after being affected by the flood. It is also called building coverage.

Using NFIP as your insurance company, the dwelling policy portion is capped at $250,000 without regard to your house market value.

Dwelling coverage from the NFIP includes;

  • Electrical and plumbing systems
  • Furnaces
  • Water heaters
  • Refrigerators, stoves, and built-in appliances such as dishwashers
  • Carpet that’s permanently installed
  • Cabinets, paneling, and bookcases that are permanently installed
  • Window blinds
  • Foundation walls, anchorage systems, and staircases
  • Detached garages
  • Pumps, well water and fuel tanks

Contents coverage

Contents coverage deals with the coverage of personal property like furniture, decoration, and clothing. It is known as personal property coverage. If a flood destroys your furniture, It replaces them. This coverage is quite optional.
It is capped at $100,000 by NFIP coverage. One can also purchase content coverage for up to $1 million from private companies.

NFIP content coverage:

  • Personal possessions such as clothing, furniture, and electronics
  • Curtains
  • Washer and dryer
  • Portable and window air conditioners
  • Microwave ovens
  • Carpets
  • Valued items like original artwork

What Doesn’t Flood-Insurance Cover?

  • Burst pipes Damages
  • Outdoor structures damaged like swimming pools, septic systems, decks, patios, and landscaping
  • Damage by Preventable mold and mildew
  • Additional expenses like lodging in a hotel if your home is damaged
  • Car Damages

How much does Flood-Insurance cost?

In 2019, NFIP’s average annual cost was $700. The risk Rating 2.0 program was initiated by FEMA in 2021. The program was designed to reduce the gap between higher-value and lower-value houses and provide a more accurate assessment of the potential risk of each property’s flooding destruction.

  • Flood zone and flood risk
  • Home age and construction
  • Coverage limits
  • Deductible level

How to reduce the cost

It is usually expensive when compared to the cost of home insurance but the risk rating2.0 was initiated to help reduce the cost. Discount applies if there is active participation in the FEMA by your community using the Community Rating system which they created a program to manage flood beyond NFIP requirements.

Below are other ways to lower the cost whether it’s from NFIP or private companies;

  • Adjusting your policy limits and deductible
  • Providing an annual elevation certificate
  • Reconstructing your home to minimize damage in the event of a claim

In addition, asking for an estimate from more than one insurance company is also an immense help.

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