From earthquakes and hurricanes to floods and forest fires, when inclement weather makes its way across an area wreaking havoc, it can have devastating effects on property.
Flood Insurance
When a disaster happens, such as a flood, it’s important for homeowners to understand their homeowner’s insurance policy. This ensures you aren’t left in a dire situation because you weren’t aware you didn’t have flood insurance.
Information available from the FEMA website has answers to questions you may have about flood insurance.
Flood Zone
A fact many homeowners do not realize is living next to or near water is not the only reason flood insurance is necessary. Homeowners living in areas designated as “low risk” can also suffer from a flash flood due to a hurricane, torrential rain storms, and melting snow.
Should there be a failure of the city or county drainage system, an overload to the system due to increased water presence, or a levee or dam breaks, homes and businesses in a wide radius can be severely impacted by flooring water.
Flood Damage
If you homeowner’s policy does not include flood insurance because it is not offered or available through specific insurance companies, homeowners do not need to worry.
Flood insurance is available to cover property and personal belongings through the National Flood Insurance Program (NFIP). Flood insurance coverage is available up to $250,000 for the structure and $100,000 for the contents. These figures are for home and business flood insurance coverage through NFIP.
Whether property is considered located in a high-risk flood zone, medium-risk, or low-risk, flood insurance can be purchased in areas that participate with the NFIP.
Flood insurance through the National Flood Insurance Program is available from insurance agents and private insurance companies.
Affordability
On average, flood insurance can cost around $500 per year for a single one-story family dwelling without a basement that resides in a flood zone. Coverage is around $65,000 to cover the structure and its contents.
Compared to having no flood insurance and the necessity of getting a disaster home loan to cover losses, based on a $50,000 loan, payments would average around $240 monthly. This is calculated using a 4 percent interest rate on a 20-year loan.
Based on the comparison, it’s more economical to purchase flood insurance. There is also the option for homeowners and business owners with property in a low to medium risk area to purchase a Preferred Risk Policy. The estimated cost for homeowners is around $180 yearly and around $39 per year for renters insuring the contents of their rental property.
Homeowners and Renters and Non-Residential
When flood insurance is purchased, it’s for the building. Coverage for the contents of the home or business is separate and not automatically included. Homeowners and renters can insure their dwelling’s contents for up to $100,000.
Business owners can purchase flood insurance for non-residential buildings with coverage of up to $500,000 for the structure and $500,000 for the contents.
Federal Disaster Insurance
If you’re counting on the government to provide losses due to a flood, unless the president declares the area as a disaster, no federal assistance will be forthcoming. A disaster does not have to be proclaimed for flood insurance to cover losses.
Protecting your property and its contents is a smart move since most disasters in the U.S. do not qualify as federal disaster areas. Don’t hesitate to investigate your options. It can take 30 days before flood insurance coverage is active and in effect.
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