Insurance for Floods: What Are the Benefits of Flood Insurance?
Homeowners face a number of physical risks to their home’s integrity. There are better-known risks, such as termites, wind damage, and fire. Yet, an often overlooked threat is Insurance for Floods.
An estimated 14.6 million homes are at risk, not just for flooding at some point but for flooding in the near future. That makes picking home insurance a more complicated process for most homeowners.
While homeowner insurance will sometimes offer a rider that provides insurance for floods, it’s typically provided as a separate policy. If you’re debating about whether to get flood insurance, keep reading for some of the key flood insurance benefits.
What Is Flood Insurance?
In essence, flood insurance covers damage to your home or business property when natural events cause flooding in your home. This includes things like hurricanes or natural bodies of water overflowing because of things like torrential downpours.
The federal government offers flood insurance through its NFIP program in areas designated as high-risk for flooding. Private insurance companies offer flood insurance for those areas, as well as areas not designated as high-risk for flooding.
What Does It Cover?
Flood insurance offers fairly specific coverage in that it generally applies only to the structure. So, if a flood comes through and damages your home, the policy will pay out for repairs to the home up to the policy limit, which is $250,000 for residences.
However, the policy won’t cover damage to the surrounding property. If the flood destroys your landscaping, you won’t get anything to help you fix that problem.
Most policies also provide an option for coverage for personal property in the house or the contents of the house up to around $100,000.
Now that the essentials are out of the way, what are the benefits you get from flood insurance?
Types of Flood Insurance
The federal government breaks the nation down into various flood zones based on the risk of flooding. While things like extreme weather events might cause floods anywhere, the types of insurance are based on these general designations.
So, for example, a home in an area with relatively low flood risk might need Zone AE flood insurance. A house on the Florida coast might need zone VE flood insurance because it’s in a high flood risk area.
The type of flood insurance you need and the premium cost will depend on which zone you occupy. Also, you should know that mortgage providers will typically require that you maintain a flood insurance policy if you occupy a higher-risk area.
It Doesn’t Require a Disaster Declaration
When things like flooding strike, the President has the authority to declare the area affected as a disaster area. When that happens, the Federal Emergency Management Agency can move in and provide support. That support can include things like grants or loans to help residents repair or rebuild their homes.
The catch is that the President must declare it a disaster area. Without that declaration, FEMA can’t do anything to help.
Even if the President makes the declaration, the process can often prove slow. That can leave you and your family without recourse for months until you manage to wind your way through the bureaucracy.
With flood insurance, you don’t need to wait on a disaster declaration. The flooding is enough to trigger the insurance policy. That lets you start the reclamation process much faster than you otherwise would in the case of a disaster declaration.
More importantly, it ensures you get support regardless of whether the President declares the event a disaster.
You Can Keep Your Home
While some people have jobs that move them around on a regular basis, most people eventually settled down in one location. You can think of it as your forever home.
Individuals and families often pour a lot of time, energy, and financial resources into their forever homes. They get renovations to the home to better suit their lifestyles. Beyond that, they decorate the home in ways that make it feel like a home.
Without flood insurance, a flood that doesn’t qualify as a disaster area could destroy that entire investment. You might find yourself forced to sell off the property.
While flood insurance can’t replace treasured family heirlooms, it does let you restore your home to its former state. Or, barring that, to something very close to what you had before.
Either way, you get to keep your home rather than look for a new home.
Peace of Mind
Another of the key flood insurance benefits is simple peace of mind. Even if you do live in an area with low flood risk, it doesn’t mean that your specific home isn’t in danger of flooding.
For example, homes near bodies of water always face a higher chance of flooding than homes away from water. Even a small, nearby pond or stream can become a flood hazard in the right circumstances.
Flood insurance provides you with peace of mind that, even if flooding is unlikely, you won’t suffer more than necessary if it does happen.
Flood Insurance Tips
When getting flood insurance, always make sure that the type of insurance matches your local flood zone. While insurance through NFIP will inevitably correspond to the correct flood zone, private flood insurance may not.
Also, keep in mind the standard policy limit of $250,000 for flood insurance. With even average home prices far exceeding this limit in many areas, you may want supplemental or high-value home insurance to bridge the gap.
Insurance for Floods and You
Savvy homeowners plan for contingencies. Getting insurance for floods is one way you can plan for contingencies.
Granted, many homes aren’t in high-risk areas for flooding, but it can still happen in most places. Flood insurance lets you know that you’ll have resources to repair or rebuild your home after a flood. It also works even without a disaster declaration from the White House.
For many homeowners, it’s a way to build additional peace of mind.
Looking for more insurance tips or info? Check out our Insurance section for more informative blog posts.
