A Comprehensive Guide on Flood Insurance

Flood insurance is a type of property insurance that covers a dwelling for losses sustained by water damage specifically due to flooding caused by heavy or prolonged rain, melting snow, coastal storm surges, or blocked storm drainage systems. Flood insurance has specific definitions of flood to be a general and temporary condition of partial or complete inundation of 2 or more acres of normally dry land area or of two or more properties from:

• Overflow of inland or tidal waters;
• Unusual and rapid accumulation or runoff of surface waters from any source;
• Mudflow;
• Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

Why Do You Need Flood Insurance?

Many people falsely believe that their homeowners insurance will cover flood damage, but this isn’t true. Homeowners insurance typically covers water damage from burst pipes and water heaters, but not from flooding. Additionally, if you live in a federally designated high-risk flood zone and have a mortgage from a federally insured or regulated lender, you are legally required to have flood insurance.

Flood insurance provides coverage for destruction and financial devastation caused by floods. Since standard homeowner’s insurance doesn’t cover flooding, you may need to purchase a separate policy for protection against flood damage. Having flood insurance could also help you secure a mortgage because lenders often require it for homes in high-risk flood areas.

How Does Flood Insurance Work?

Flood insurance works by reimbursing the policyholder for the cost of damages caused by a flood. This coverage includes repairs to the dwelling, replacement of personal belongings, and if necessary, costs associated with temporary housing. The policyholder must first pay the deductible before the insurance covers the remaining damage cost. The amount that’s covered depends on the policy limit.

Factors Affecting the Cost of Flood Insurance

Several factors affect the cost of your flood insurance policy, including your home’s age, construction type, elevation, the level of flood risk associated with your area, and the amount of coverage you need. Homes in high-risk areas will typically have higher premiums than homes in low-risk areas. The amount of coverage you purchase also affects your policy’s cost. Many homeowners choose to carry just enough insurance to cover their mortgage, while others want to cover all potential reconstruction costs.

Considering Other Insurance Policy Options

In the context of flood insurance, you may also want to compare green slip insurance, which is a type of insurance in certain regions that covers injuries to others when you cause an accident with your vehicle. It’s essential to thoroughly understand all types of insurance you may need, from flood insurance to green slip insurance, to ensure the utmost protection.

Flood insurance is an essential component of financial protection for homeowners living in high-risk areas. Even those in moderate- to low-risk zones may find flood insurance beneficial as over twenty percent of flood insurance claims come from areas outside of mapped high-risk flood zones. When it comes to protecting your home and your belongings from any kind of accident or natural disaster, it pays to be prepared.