Monday, December 16, 2019

Flood Insurance

Do You Need Flood Insurance?

The Basics

People often assume flood is covered by their home insurance policy. No home insurance policy covers flood damage.  Consumers are not required to carry flood insurance unless they are in a high risk Flood Zone. In that case, their home mortgage company (if they have one) will require a flood insurance policy. You should talk to your agent and make sure you know if you should have a flood policy or not, regardless of which zone you are in. 

   Your flood policy has a Dec page, just like every other insurance policy. It will “declare” who you are, what property you have covered, the insurance limits you have chosen and how much you are paying.

   Flood Insurance is written through the federal government under the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program regardless of who you buy the policy from. There are various levels of coverage and deductibles to choose from. You will have a separate deductible for both the building and the contents. Unlike Home and Auto insurance, Flood insurance only covers You. There is no “other party” liability in a flood policy. Keep in mind- two properties, or two acres, have to be flooded for the event to be considered a flood. Your hot water heater overflowing and flooding your hallway is not covered by flood insurance.

Building Coverage: This covers physical damage to your home due to rising flood waters, and it covers the building and its foundation, electrical and plumbing systems, a/c equipment, furnaces, walls, flooring… etc. The amount of building coverage should be based on your dwelling/replacement cost amount on your home insurance policy. The flood cannot be higher than the home insurance amount and it usually caps at $250,000 for residential homes.

Contents Coverage: This covers physical damage to personal property such as clothing, furniture, electronics, certain valuable items, such as artwork (up to $2500). It will not cover currency or precious metals.

Deductibles: The Building and Contents coverage have a separate deductible. The higher the deductible, the lower the premium, but the more you will pay out of pocket in the case of a claim. (Just like in Homeowners insurance)  

  That’s Flood coverage. It is a simpler Dec page than home and auto with fewer coverages to understand. But please make sure you do understand what it will and will not cover and how much coverage you need to have. 
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