Will your homeowners insurance cover flooding?
The first question that comes to mind whenever anyone is looking to purchase home insurance is whether or not it comes with flood coverage. In places where it is common for houses to experience flooding, this is a very important aspect of your coverage plan and one you should be using as a deciding factor on what insurance you should get.
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What is Home Insurance?
Home insurance is a kind of property insurance that covers damages and losses on an individual’s home. This includes furnishings and other things around the home. It usually covers interior as well as the exterior damage, loss or damage of personal assets and any injury that may arise while on the property.
However, please do not confuse home insurance with home warranty or mortgage insurance. Home insurance also has a liability limit. It will determine how much coverage the insured has if anything unfortunate was to happen.
Now you could understand why it is so important to find out what kind of coverage you have when purchasing home insurance with flood coverage.
However, it is necessary to note that any standard home insurance will not cover flooding. But that’s not the end of it. While getting home insurance with flood coverage is unlikely, you can still get flood insurance. And to do that, you have to determine whether or not you actually need it.
Is flood insurance required?
Flood coverage may be a requirement for you if you live in a designated flood zone. You should always look for flood insurance then. But even if you live inland and away from any major rivers, you could still manage to experience flooding. You might also experience flooding if your house is near melting stone, water running down a steep hill or an overflowing creek or pond. It all depends on the area you live in. Which is why it would be advisable to speak to an insurance expert and determine if you do need it.
Once you’ve decided whether or not you need it, you can then contact the relevant people, find out where to buy flood insurance in your area and get a flood insurance quote.
Where can you buy flood insurance?
Flood insurance is only offered by the federal government and some private insurers. The federal government provides insurance through the National Flood Insurance Program (NFIP). This program is run by the Federal Emergency Management Agency (FEMA). They’re usually sold by private insurance agents even though they are underwritten by the government.
The National Flood Insurance Program provides up to $250,000 insurance coverage for the structure of the home and $100,000 coverage for personal possessions. They also provide replacement cost coverage resulting in enough coverage to rebuild your home just like it as before the damage. However, they will only provide actual cash value to replace all your belongings. This might lead to a loss as you would not get as much as you paid for them and might have to pay considerably extra to replace them. Especially if these are old items and their prices have depreciated in value over time.
A few examples of items that NFIP will provide coverage for are furniture, clothing, electronic equipment, curtains, AC units, carpets, freezers and up to $2,500 in valuables such as valuable art etc.
Types of private flood insurance
There are mainly two types of flood insurance.
- One, a primary flood insurance which is also known as “first dollar” insurance. A lot of private insurers have begun to offer this now. These policies are usually similar to the NFIP policies but they offer considerably high flood insurance coverage. However, to find out more about these policies in your area, it would be best to contact your insurance agent to get a more accurate quote as every company is different and offers different amounts of coverage and rates.
- The second type of policy is an express flood insurance which is available for homeowners who need additional coverage even after the NFIP. This is also for the people who live in a community that do not participate in the NFIP. Express flood insurance can be purchased regardless of whether your previous policy is from the NIFP or through a private market insurance. It is not necessary for express flood insurance to only be available in areas with high risk. You may also find it in low risk flood zones. You might purchase these policies from specialised companies through independent insurance agents or from regular home insurance companies that have arrangements with private insurance providers.
Is water damage covered?
Although flooding might not be covered by most home insurance companies, they may offer coverage for water damage from busted pipes or busted water heaters. Which means if any pipes were to burst and cause damage, some home insurance companies would reimburse you for all the damage caused.
However, it is important to note that some insurance companies disregard loss caused by wear and tear. So if your pipes eroded over time and were leaking from months gradually causing water damage on the walls and floor and then eventually burst, the insurance companies might not reimburse you for that.
What do you need to do?
43% of people when purchasing insurance incorrectly believe they are purchasing home insurance with flood coverage when that is not usually the case. Thus, it is advised to speak to an insurance agent before you decide to buy any sort of insurance so they can guide you on the dos and don’ts and find you the best options with the best rates that are better suited to your needs.
It is also important for you to first find out whether or not you actually need flood insurance. In case you don’t live in a high risk zone, there would not be any need for you to get insurance. But if you do, the government might make it essential for you to get flood insurance. Again, like we said, it all depends on the type of land you live in.