Did you know that damages caused by floods are specifically excluded from all Homeowners policies? To be covered for these damages, you need to have a separate Flood insurance policy.
Flood insurance is particularly indicated for people who live in flood-prone areas. It is important to understand, however, that while Homeowners insurance covers your home and its contents in the same condition it was before a loss, Flood insurance only gets you back on your feet.
“Flood” is defined as a general and temporary condition of partial or complete inundation of normally dry land areas from:
Don’t let that you don’t own beachfront property lull you into a false sense of security – beachfront structures account for only 3% of all flood losses. Homeowners who live in flood-prone areas, though, have a 26% chance of having a flood loss over the course of a 30-year mortgage! Mortgage lenders often require Flood insurance for loans on homes determined to be in flood-prone areas.
Your property may be at risk even if you don’t live in an area prone to floods. Each year, about 35% of all flood claims paid are for property located outside high-risk areas. The good news is that there is a Preferred Risk program that offers substantial premium discounts for homes located in low hazard areas.
If you think your home is at risk, contact your agent to determine your flood zone. Or you can check out special Flood insurance maps published by FEMA (the Federal Emergency Management Agency). These maps (which indicate a community’s flood hazard areas and the associated degree of risk) are usually kept on file at your local town hall or county building and are available for your review.
Don’t wait until the water’s rising to decide that you need Flood insurance! Insurance carriers require a 30-day waiting period for new applications and endorsements to increase coverage. The exception is for insurance purchased as a condition for a mortgage loan. In that case, the Flood insurance is effective on the date of the closing.
Flood insurance is not as broad as Homeowners insurance; losses are settled on an actual cash value basis, not on replacement value. Flood insurance provides limited coverage on the portion of the building below the lowest floor, and no coverage at all to personal property in basements.
This description of coverage is not an insurance contract. Your policy is the contract that specifies and fully describes your coverage. Conditions and exclusions will apply. Not all coverage described is available in all states.