When it comes to understanding Flood insurance, it’s not always easy. It can take many years to learn all of the ins and outs of the insurance business, so it’s completely understandable when the average homeowner has questions. And while we can’t answer all of your questions in one article, we can do our best to answer some of the most common. Here are 10 common questions in regard to Flood insurance:
1) Why do I need Flood insurance?
Unfortunately, Homeowners insurance does not cover flood damage. Flood insurance must be purchased as a separate policy. In the event of a flood, you will need this coverage to pay for any damages that are incurred. In certain areas that are considered high risk, Flood insurance may be a requirement by mortgage lenders.
2) I don’t live near water; do I need Flood insurance?
As just mentioned, in some high-risk areas Flood insurance may be a necessity. In other lower risk areas, such as those away from water, insurance may not be a necessity but is still recommended. In fact, floods are one of the most common types of natural disasters, and even a few inches of water can cause thousands of dollars in damage. In addition, floods are not always caused by lakes and oceans. Floods can also be caused by things like hurricanes and snowmelt. So even if you don’t live near water, you could still be at risk.
3) What are the different coverage options?
When it comes to Flood insurance, you can purchase it for the structure of your home, your personal property, or both. When choosing a policy for only the structure of your home, it is important to know that your personal property will not automatically be covered. If you wish to have personal property covered, you need to name it and state it within the policy itself.
4) I thought Federal Disaster Assistance paid for flood damage?
It does, but only if an event has been Presidentially declared a natural disaster – and this is a rarity. In fact, over 90% of natural disasters are not Presidentially declared. This means that 90% of natural disasters are not covered. In addition, government assistance in such cases is not actually free. Financial assistance is given as a loan which must then be paid back. Flood insurance, on the other hand, will cover your damages, regardless of whether an event has been Presidentially declared or not.
5) Does Flood insurance cover my basement/crawl space?
When it comes to basements (or any type of floor below ground level), some limitations apply. These limitations may differ depending on the agency you are working with. When it comes to this topic, it is best to ask your insurance agent what is and what is not covered regarding your basement.
6) Do I need Flood insurance if I am a renter?
It is important to remember that in the event of a flood, there is more than the structure of your home at risk – your personal property is also at risk. Therefore, it is important to have Flood insurance to cover your personal belongings should they become damaged in the event of a flood. Another good reason to have Flood insurance is in case you need to vacate the property during repairs. In such a case, Flood insurance can help to pay for your alternative accommodations.
7) What does Flood insurance actually cover?
The exact coverage of your Flood insurance will depend on your policy. With that being said, Flood insurance often covers any direct physical losses that have been caused by a flood. Losses may also be covered in the event of high waves, severe storms, and tidal surges. As mentioned previously, there are limitations on what Flood insurance will cover in regard to basements, so double check with your insurance agent if you would like to know more details.
8) How long does it take to get Flood insurance?
While there are some exceptions to the rule, there is typically a 30-day waiting period for Flood insurance to take effect. The reason for this is so that people cannot obtain Flood insurance just as the expectance of a flood is being announced. There are some exceptions to this rule, the main one being if you are making, increasing, renewing, or extending your loan. Other exceptions can be explained in further detail by your insurance agent.
9) How do I know if I am in a flood zone?
Call your town. Most towns have maps and elevation certificates related to each specific house. Another option would be to ask your insurance broker and have them review the maps for you.
10) Is Flood insurance expensive?
Flood insurance is affordable, and less than you might expect. With that being said, the actual cost of insurance will vary depending on which flood zone you are in. Obviously, those who are in higher risk zones will spend more on insurance than those in low risk zones. If you are in a high-risk zone, the elevation level of your house may also influence the cost of insurance.
If you have any additional questions about Flood insurance, ask a local insurance agent. And remember – no question is a bad question. Insurance is a complicated business and it’s the job of the agent to help you understand it!