Many homeowners think that floods are dangers they can only face if they live close to large bodies of water. This way of thinking should be re-thought. Floods can be caused by storms, hurricanes, or even melting snow. No matter where your house is located, flooding is always a risk. Moreover, you should be protected against that risk.
At this time, flood insurance is a separate policy, and it is not covered by the standard homeowner’s policies. The insurance company providing the policy should be a member of the National Flood Insurance Program (NFIP) to sell flood insurance.
A flood insurance policy protects you from:
Damages to your home or building.
It refers to the physical structure of the home or building.
Damages or losses to the contents
Clothes, appliances, furniture and whatever other items are located inside the home would be covered.
Replacement coverage is only offered for primary homes. If you have a secondary home you should be aware that your flood insurance at this location is paid on an ACV (actual cash value) and not full replacement cost.
It is also important to advise your insurance agent that you have protective measures in place, such as flood vents and breakaway walls, in order to receive favorable rating when shopping for the best prices for flood coverage.
Before purchasing such insurance, there are a few things that you should be aware of:
- Not all insurance companies include all three of the above coverage points in their standard policy. Some may require additional premiums to be paid in order to include either the contents coverage or the replacement cost, or both. You need to make sure of what exactly is covered before you sign the policy.
- There are limits applicable to the amounts for the damages to the building and the contents. At this time NFIP (National Flood Insurance Program) imposes the flowing:
- $250,000 for the physical structure damages
- $500,000 for non-residential buildings
- $100,000 for the contents.
You can purchase an excess flood insurance policy if you wish to be protected for higher amounts than the above.
How much does a flood insurance cost?
The rates for a flood insurance policy are determined by the type of the house and the level of risk of the general area. In general, there are two levels:
- The high-risk zone which is defined as an area that a house runs a high possibility to get flooded and
- The low-to-moderate zone which is defined as an area that a flooding is much less likely to occur. Houses in a high risk zone are required to have a flood insurance policy by many mortgage companies, while those in a low-to-moderate zone are not.