Flood insurance sounds like one of those unnecessary policies you think you never might need, but did you know that homeowners insurance doesn’t cover flooding? Floods are the most common natural disasters in the United States, and even a few inches of water can cause massive damage to your home and your belongings. If you have a mortgage on your home and you live in a high risk flood zone, your lender requires you to buy flood insurance most of the time. If you live in a moderate or low risk zone, and your community belongs to the National Flood Insurance Program, then you have the option of buying flood insurance.
If you fall into the second category, you’re probably wondering how much buying flood insurance really costs. Depending on a few different factors, it can cost as much as a few thousand dollars, or as little as a few hundred. Here are just a few of the things you need to know about the federal flood insurance program.
Your Homeowners Insurance Doesn’t Cover Flood Damage
Much like its name suggests, flood insurance only covers water damage caused by flooding. Once water falls from the sky, touches the ground and enters your home, it’s a flood – and only flood insurance will pay for the damage.
It’s important to know that your homeowners insurance policy doesn’t usually cover flood damage. Because floods can occur anywhere, you should consider purchasing a separate flood insurance policy. Flood insurance is issued through the National Flood Insurance Program, or may be sold by some private insurers. A local insurance agent can help you purchase flood insurance.
Anybody Can Live in a Flood Zone
Every state gets flooding, but the amount of risk matters. The National Flood Insurance Program can tell you your location’s risk, whether it’s low, medium or high. To summarize, zones A and V are high risk areas., and medium and low risk areas are zones B, C, and X. Being in zone D signifies that risk of flooding is still unknown. These zones are used to determine rates, and even if you’re in zone D, you can still get flood insurance.
Over 20% of Claims Come From Moderate or Low Zones
This counts as 1 out of 5 people, which isn’t a small number – and it’s also not counting uninsured homeowners who weren’t able to file a claim. No one knows how many uninsured homeowners there are, although only 18% of homeowners have flood insurance.
Government Aid Won’t Be Much Help
Aid from the government comes in the form of loans, which will need to be repaid. Before you are able to qualify for a loan, your area has to be declared a federal disaster area, and federal disaster assistance is declared in less than half of all flooding events.
Deciding to Purchase Flood Insurance
To get a gist of how much coverage you potentially might need, take inventory of your home and then estimate the cost of repairing or rebuilding your home. These two numbers together are your potential loss.
Generally, a flood policy covers rebuilding costs up to $250,000. You can also get a NFIP to cover up to $100,000 in inventory. If your home would cost more than $250,000 to rebuild, you need to purchase a private flood insurance policy known as excess coverage to insure the value of your home.
Have questions on flood insurance? Contact Friends Insurance Brokerage at (718) 648-1313!