Flood Insurance 101: What Homeowners Need to Know

Your house will most likely be the most costly — and significant — purchase you ever make. Yes, at its most basic, it is where you will sleep and spend your off-work weekends. But it’s also where you’ll raise your family, maybe conceive and launch a business, and create memories to last a lifetime. If you’re like most Americans, your house will play an important role in the legacy you leave your children and grandkids.

It’s obvious, then, that anything so valuable must be safeguarded.

If you’re thinking about buying a home, you’re probably aware that you’ll need homeowners insurance to safeguard your investment. However, it is critical to recognize that most typical homeowners insurance plans do not cover all potential damage to your house. This is where insurance riders, sometimes known as add-on plans, come in.

Flood insurance is one of the most popular — and critical — rider policies that homeowners should be aware of. We look at what flood insurance is, how it works, what it covers, and address all of the most frequent concerns that homeowners have about this sort of coverage below.

What Exactly Is Flood Insurance?

Flood insurance is a form of insurance coverage that protects your house and valuables from losses caused by water damage caused by floods. Flood insurance is often obtained in addition to or separate from your homes insurance coverage.

What Is the Process of Flood Insurance?

Flood insurance operates in the same way that other forms of insurance do.

The first step in obtaining flood insurance is to buy a policy. This policy will explain all you need to know about your plan, such as what is covered, what your monthly premiums will be, what your deductible will be, and so on. It usually takes around 30 days for an insurance to take effect after you purchase it.

Following the purchase of your insurance, you will be required to make monthly premium payments in order to keep coverage. If your house or property is damaged by water during a flood when your home is insured, you will be able to make a claim with the insurance provider. It’s vital to know that you must first fulfill your deductible before the insurance provider would pay out.

How to Purchase Flood Insurance

Flood insurance is provided by the Federal Emergency Management Agency (FEMA) through the National Flood Insurance Program (NFIP), which works with more than 60 commercial insurance firms to market flood insurance policies.

Most homeowners obtain NFIP flood insurance as a rider via their existing homes insurance carrier, however coverage can be purchased separately from a different firm if desired. Matic makes it simple to locate the best flood insurance coverage for your requirements. Simply answer a few questions, and we’ll connect you with an insurer in your region in as little as 60 seconds, eliminating the need for you to comparison shop on your own.

NFIP policies will only cover up to $250,000 in building property damage and $100,000 in personal possessions damage. If you require more coverage, your private insurer may be able to provide it.

What Is Flood Insurance Covered For?

The NFIP allows homeowners to purchase either building property coverage or personal items coverage, or both. Each of these policies covers a separate set of issues.

Building Property Insurance

The physical structure of your home is protected by building property coverage. This covers the house’s shell, foundation, plumbing, electrical systems, HVAC systems, cabinets, flooring, and so on. A separate garage is usually covered as well. The maximum amount payable for building property coverage under an NFIP insurance is $250,000, while more coverage can be bought via your insurer.

Personal Contents Insurance

Personal goods insurance protects the particular things in your house. Certain appliances, furniture, electronics, clothing, freezers and missing food, and different valuables (within restrictions) are often included. Personal belongings coverage is limited to $100,000 under an NFIP insurance, although extra coverage can be obtained via your insurer.

What Does Flood Insurance Exclude?

To begin, it is critical to understand that flood insurance only covers water damage caused by a flood. Flood insurance coverage do not cover water damage caused by other disasters, such as a broken pipe or a sewage backup. Individual insurance can be purchased to protect yourself against these hazards.

It is also crucial to understand that flood insurance does not cover total property damage. Items that are not covered include:

  • Automobiles and motorcycles
  • Fencing, decks, patios, pools, and other outside structures
  • Landscaping
  • Structures on your land that are detached
  • Cash or jewelry in excess of certain limitations
  • Certificates of stock

Furthermore, mold, mildew, or other water damage that might have been avoided is not usually covered. If water damage from a flood causes mold or termites, the damage is not usually covered.

Items housed in a below-ground room (such as a basement or crawl space) may not be covered depending on the terms of your policy.

Is Flood Damage Covered by Car Insurance?

The terms of your auto insurance coverage will determine whether or not your car or other vehicle is insured for flood damage. Your automobile should be insured if you have comprehensive coverage, but it’s crucial to study your policy carefully to understand exactly what events and types of damage are covered. Each flooding incidence will almost certainly need the payment of a deductible.

Is Flood Insurance Necessary?

It depends, is the response. If your property is in a flood-prone location, your mortgage lender will almost certainly need you to carry a particular level of flood insurance as a condition of your loan.

Even if your lender does not compel you to obtain flood insurance, doing so might be quite prudent.FEMA estimates that one inch of flood water can cause more than $25,000 in damage. FEMA also states that more than 20% of all claims received by the agency are for residences in low- or moderate-risk areas. Keeping this in mind, all homeowners should think about getting flood insurance for their properties.

What Is the Cost of Flood Insurance?

The cost of your flood insurance coverage will be determined by a variety of variables. The most important of these criteria is where your property is located; that is, how likely is it that it will flood?

Other factors that impact the cost of your insurance include whether you get building coverage, personal items coverage, or both; the amount of coverage you buy; the deductible you pick; the age and style of your property; and more.

Having said that, the average yearly cost of an NFIP flood insurance coverage is around $700.

Is Flood Insurance a Good Investment?

Because homes insurance policies do not often include flood coverage, you should at least consider obtaining flood insurance to have complete piece of mind that you are protected in the event of a worst-case scenario. While there will be an additional investment, most homeowners believe that knowing they are properly safeguarded is well worth it.

If you’re thinking about getting flood insurance for your house but aren’t sure how to get started or how much coverage you need, the good news is that there are plenty of resources to help you discover the answers.

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