Flooding can damage a home and its contents in a way that homeowners insurance doesn’t cover. That’s why a separate flood policy is a smart investment for anyone in an area prone to flooding.
Before you buy, learn all about how it works and what to look for in a policy.
Location
Many homeowners are under the impression that their standard home insurance covers flood damage. However, this is different. Flooding damage is a separate issue that a specific policy must cover. This coverage isn’t included in most home insurance policies and must be purchased separately.
The National Flood Insurance Program (NFIP) offers this insurance. To learn if your community participates, you can search by address or zip code online. Then, you can find a participating insurance company. Many NFIP policies have a 30-day waiting period, so it’s wise to research and purchase a policy before hurricane season.
Your mortgage lender will likely insist you have insurance if you reside in a high-risk area. The lender doesn’t want you to empty your bank account to cover major repairs and rebuilding after a flood. Usually, disaster aid in the form of no-interest or low-interest loans must be paid back, so having a policy is a better option for financial peace of mind.
But even if your property is in a low-risk zone, it’s still worth exploring options to protect your belongings. Remember, flooding can occur anywhere. Also, flood maps change over time due to weather patterns and new construction. So, just because you’re in a low-risk zone now doesn’t mean you won’t move into a higher-risk zone down the road.
Cost
There are a variety of factors that go into the cost of flood insurance California. For example, your home’s location will have a significant impact on the price of a policy. Insurers will look at the potential risk of flooding, including how close it is to a flood zone, the area’s history of flooding, and whether or not protective measures are in place.
The cost will also vary depending on the level of coverage you select. The NFIP requires that all policies cover at least 80% of your home’s value, while many private insurers offer a higher limit. In addition, your choice of deductible will affect the premium. A high deductible will save costs; a low deductible will result in a higher premium.
Additionally, the age of your home and its contents will impact the price of a policy. Older homes with less sturdy materials can be more expensive to insure than newer ones. Also, the value of your belongings will affect the price of a policy, with more valuable items costing more to insure.
The cost of a flood policy will also depend on your community’s participation in the NFIP’s Community Rating System (CRS). The program awards communities that work to reduce their risk with discounts on their NFIP flood insurance rates. This could make a flood policy more affordable for residents.
Coverage
While water damage from things like burst pipes is usually covered under standard home insurance policies, flood damage requires a separate policy. And because it’s one of the most common natural disasters, it’s essential to know whether or not you need flood insurance and what your coverage options are.
The good news is that flood insurance is available to everyone in a community participating in the National Flood Insurance Program. And, while flood insurance isn’t required for homeowners with mortgages backed by the federal government (including FHA, VA, and USDA loans), most lenders will need it for properties in high-risk areas.
Most flood insurance policies cover the cost of rebuilding a home or replacing personal belongings damaged by water up to a specific limit.
Claims Process
During a flood, homeowners and their insurance adjusters must be on the same page. Doing so will give them a better chance of restoring or replacing their belongings and lessen the impact on their lives.
When filing a flood claim, it’s essential to do a thorough inventory of damaged items. This should include the brand and model number of each item, as well as how much it costs. It’s also helpful to keep receipts and invoices. And be sure to take lots of photographs.
If the home or contents are insured under the NFIP, they will be paid Replacement Cost Value as long as the policyholder can document the actual cost. If the items are insured under another type of homeowners’ insurance, they will be paid real cash value.
Homeowners in a flood zone should make sure to have their homeowners and NFIP policies with the same company and have a clear understanding of the terms and conditions of each. This knowledge will reduce the risk of miscommunications, which can delay payments.
Homeowners should also be aware that to ensure their insurance provider covers everything they are entitled to, they must submit a formal request for a supplemental claim following the flood. This should be sent to the insurance carrier and copied to the adjusting firm. If you believe the insurer is denying your claim or lowballing your settlement, it’s essential to ask questions and get an expert opinion.
