September 2017—Hurricanes Harvey and Irma caused enormous devastation in Texas and Florida. Much of the destruction came in the form of flooding, especially in areas that weren’t considered high-risk for water damage. Now homeowners all over the country are wondering whether they’ve thought enough about flood insurance, and rightly so. If you think that your standard property insurance policy will cover flood damage, you’re mistaken. Additional coverage is needed in the event of any type of flood damage. Check out the facts about coverage and being prepared.
1. Who Needs Flood Insurance?
Anyone taking out a mortgage on a home in a declared high-risk flood zone is required to purchase flood insurance and own it for the life of the loan. If you don’t live in a high risk flood zone, you’re usually not required to have this insurance. But here’s why you should consider it: Large bodies of water aren’t the only causes of flooding. Storm drainage back up, high packs of snow, and newly developed areas where roads reduce the absorption of water in the soil can all cause flooding. Sudden heavy rainfall can be enough to cause fast-rising water in the most unexpected places. A flash flood can be a wall of water 10 to 20 feet high. Only a few inches of water can cause tens of thousands of dollars in damages to property.
2. Where Do You Buy It?
The National Flood Insurance Program website lists more than 80 private insurance companies that offer flood insurance. You can also purchase it through property insurance agents.
3. What Does Flood Insurance Cover?
It’s recommended that you purchase coverage for both the building and the contents of your home since your standard homeowners insurance won’t cover either type of loss if due to flooding. Flood insurance does not cover the land on which the dwelling is located. Also, there may be limited coverage for basements, crawlspaces, lower floors, and enclosed floors of elevated buildings.
Building coverage covers property up to $250,000 and contents coverage up to $100,000 of personal property. Like other insurance policies, purchasers must determine their deductibles for these coverages, which will affect their rate.
Building coverage includes:
∙ The building and its foundation
∙ The electrical and plumbing systems
∙ Major systems such as AC, furnaces and the hot water heater
∙ Some appliances such as refrigerators, stoves, and dishwashers
∙ Wall-to-wall carpeting over an unfinished floor
∙ Window blinds
∙ Paneling, wallboard, bookcases, and cabinets that were permanently installed
∙ A detached garage (up to 10% of building property coverage)
Contents coverage includes:
∙ Clothing, furniture, and electronic equipment
∙ Curtains
∙ Portable and window air conditioners
∙ Portable appliances such as microwaves and dishwashers
∙ Carpeting that isn’t covered under the building coverage
∙ Washers and dryers
∙ Food freezers and the food inside
∙ Some valuables such as original artwork and furs (up to $2,500)
4. What Doesn’t It Cover?
Flood insurance won’t cover:
∙ Currency, precious metals, and valuable papers such as stock certificates
∙ Damage caused by moisture, mildew, or mold that could have been prevented by the homeowner
∙ Items outside of the dwelling such as trees, plants, wells, septic systems, walkways, decks, patios, fences, hot tubs, seawalls, and swimming pools
∙ Financial losses due to business interruption or loss of use of the insured property
∙ Cars, motorcycles, four-wheelers, etc.
5. What is Direct vs. Indirect Coverage?
Direct damage is indicated by the list above in building and contents coverage. Indirect damage—such as from a fire, sewer backup, sink hole, or mudslide—could also be covered if it was caused by the flooding. Check with your insurance agent to make sure you understand what your policy will and won’t cover.
6. What Does Flood Insurance Cost?
Premiums vary widely based on the type of coverage and factors surrounding your home. (Low-risk flood areas could cost as low as $110 a year, but higher risk ones as much as $2,000 a year.) The home’s age, style, property elevation, and location determine the level of risk that your home will be damaged in severe weather, which affects the rate you’ll pay. Rates are set nationally, so they’re the same among insurance companies. It’s possible to qualify for discounts, so ask your insurance agent.
7. How Can I Prepare for a Flood?
In addition to having a flood insurance policy, there are some things you can do to be prepared for flooding or even help minimize damage.
∙ Make sure gutters and downspouts are cleaned at least twice a year and drain away from the house.
∙ Ensure landscaping doesn’t allow water to collect near your home’s foundation. Low-lying areas should drain away from the house.
∙ Where possible, move valuable contents such as furniture and electronics to a higher location. Protect photos and other valuables in protective, waterproof containers.
∙ Do a full inventory of your home and its contents with video or snapshots. This will provide an important record of collectibles, artwork, antiques, and other irreplaceable items. Upload the video or photos to cloud storage.
Knowing your flood insurance coverage and reducing the risk of damage where possible could help make the recovery a little easier.