Your home insurance policy doesn’t cover water damage when it’s caused by a flood. In fact, it will likely have a specific exclusion for this type of damage. This means, if you live in a designated flood zone, you’ll want to purchase a separate flood insurance policy. This can be done through the federal flood program or a private insurance company. This is a bit different from your car insurance which will pay to repair or replace your —assuming you have comprehensive coverage on your vehicle.
Flood insurance, most commonly purchased separately from your home insurance policy, provides coverage for claims from water damage related to flooding. If your home or personal property is damaged by a flood, it’s your flood insurance policy that provides coverage to rebuild or repair your home. It can also pay you the actual cash value of your personal belongings if they are damaged in a flood.
Depending on where you purchase your flood insurance policy, either from the National Flood Insurance Program (NFIP) or a private insurance carrier, you can expect your flood insurance to generally cover some or all of the following:
If you purchase your policy from the NFIP, it will offer up to $250,000 in coverage for your home’s structure (or dwelling) and up to $100,000 for your personal property. If your home has a higher replacement cost value, then you may need to seek coverage from a private flood insurer. In some cases a private flood insurance policy can be purchased to supplement your NFIP policy, or you can purchase the entire coverage form a private carrier.
When you purchase a flood policy through the NFIP there is an important difference when compared to most home insurance policies. The homes structure or dwelling coverage is covered on a replacement cost basis, but the personal property is insured for it’s actual cash value.
What does this mean?
It means that NFIP will typically only pay you the actual value of your covered personal belongings. For example, your sofa may cost $1,000 brand-new, however, at the time of the loss it was only worth $600, then the NFIP will only pay $600 toward the replacement of the sofa. This is one reason you may want to consider purchasing your flood insurance policy with a private insurer, they may cover your personal property at replacement cost.
All insurance policies have things they don’t cover, and flood insurance is o different. Regardless of where you buy your flood policy, from the NFIP or a private company, the following exclusions will likely apply:
Flood insurance is not compulsory by regulation. However, as a condition of your mortgage, you may be required to purchase a flood policy. The higher the flood risk the home is located in, the more likely your lender will make flood insurance a condition of your loan.
Here’s a consideration, FEMA estimates that an inch of water could cause up to $25,000 of damage to your home. So, even if you don’t live in a high-risk flood zone, heavy rain, melting snow, and severe coastal weather could cause flooding. Flooding that may not be covered by your standard home insurance. Additionally, 20% of flood claims come from low or medium risk areas, meaning flood insurance may be a good idea for anyone with a home near a body of water.
Renters insurance policies won’t cover damage resulting from an outside flood. To protect your personal property against flood damage, you’ll need a separate flood insurance policy. However, you’ll only need to cover your belongings on your flood policy and not the actual residence. It is your landlord’s responsibility to insure the structure you live in.
Even if you don’t live in a flood zone, heavy rain, melting snow, and severe coastal weather could cause flooding.
Yes, if you carry comprehensive coverage on the vehicle damaged from flooding. Comprehensive covers events out of your control, including flooding and severe weather. A deductible typically applies.
Generally speaking, flood insurance policies are fairly reasonable. If you purchase from the NFIP the average cost is estimated around $700 annually. However, like all forms of insurance, your rate is determined on the amount of risk and coverage. So, if you live in a high-risk flood zone or an area prone to flooding, you’re premiums will be higher. In fact, premiums for private flood insurance companies will vary greatly based on location (proximately to water sources), elevation, and the coverage limits you require.
Flood insurance is easy to purchase. If you have an insurance agent give them a call and they can assist you with either a private policy or one through the NFIP. Sometimes you can call your insurance company directly, and they can assist you with an NFIP policy. Need more information? You can also request to quote flood insurance online with IronPoint Insurance Services, LLC or give us a call at (877) 334-7646 to speak with a specialist.
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