What You Need to Know About Flood Insurance
When the floodwaters are rising, your first thought will probably be to contact the insurance agent who handles your home insurance. In most cases, your agent will quickly tell you that flooding is not a covered loss under the policy.
That is bound to be hugely disappointing. Water damage is messy, and it can cause a lot of damage.
Insurance policies specifically define the most common terms. For the purposes of insurance, flooding refers to a temporary condition where water partially or fully inundates an area of land that consists of two or more acres. The definition further clarifies that flooding refers to properties that are normally dry and the flooding affects your property and one other.
Flooding is always surface water. It is not water that backs up or enters a home through sewers or drains.
This is an important definition because most flood insurance policies are purchased from the federal government via the National Flood Insurance Program. The best way to go about purchasing flood insurance is to call an insurance agent who is certified in flood insurance. They will determine your flood zone, calculate your insurance premium, help you apply for a flood policy, and answer any questions you have about flood insurance. Consumers cannot go directly through the National Flood Insurance Program to get a flood policy.
Anyone can apply for a flood insurance policy even if the property is not located in a designated flood area. The National Flood Insurance Program typically caps flood insurance policies at $250,000 of coverage for residential dwellings.
The areas where flooding is more likely to occur will have higher premiums than inland areas where flooding is uncommon. The other caveat to buying a flood insurance policy is they don’t offer as many coverages and endorsements as a traditional home insurance policy. For example, flood insurance policies do not cover additional living expenses. If you have a flood insurance policy and need to move out of your home because of the water, you will have to pay for temporary housing out of your pocket.
A few private insurance companies also sell flood insurance without having to go through the National Flood Insurance Program. The benefit to choosing a private insurance company for flood insurance is there is usually less red tape than going through the federal plan. Moreover, many private insurance companies cap their limits for flood insurance higher than $250,000 which is preferable for higher-valued homes.