Be Flood Smart & In The Know

Posted by Tom Crimmins Realty on Tuesday, September 9th, 2014 at 12:24pm.

You are paying for house insurance, assuming your property is covered for any natural disaster that can possibly occur. However, not all homeowners are aware that home insurance policies don't necessarily cover damage related to a flood, as the risks are too great. As a result, homeowners must purchase flood insurance through a private company.

What Is Flood Insurance?

Most insurance policies cover some form of water damage, ranging from leaking faucets to bursting plumbing pipes. Fun fact you may not realize is - some policies don't cover water damage because of flooding of rivers or backed up sewers that pump into your home. Standard flood insurance policies cover "direct physical damage" to a property resulting from floods.

A separate policies can be purchased to protect belongings inside your home. Homeowners can buy up to $250,000 in coverage for the home, and up to $100,000 for possessions. Even renters are permitted to purchase flood insurance to cover their possessions.

How Does Flood Insurance Work?

Flood insurance isn't sold by FEMA directly, but rather is sold to customers through private insurance agencies. Premium rates are determined by the government, and they remain consistent from one insurer to the next.

The price homeowners pay for flood insurance depending on a number of factors, including how prone the neighborhood is to floods and how much coverage a homeowner wants. The average annual premium is about $520 for $100,000 worth of coverage for a property with no basement, and approximately $615 annually for a property with a basement.

Filing A Flood Insurance Claim

The claims process is like any other insurance claim. Once the claim is filed, the damage will be analyzed by an adjustor -- who has been assigned by the insurance company. A "proof of loss" form will need to be filled out and submitted to the insurer within 60 days of the flood occurrence.

Do You Need Flood Insurance?

It is a wise decision to find out if you are eligible or in need of flood insurance before purchasing a home. For residents of a community to be eligible, the community needs to enforce floodplain statutes to lessen the chances of flood damage, after which FEMA ensures that such regulations are followed.

FEMA offers maps that outline what areas are at high risk for floods, and those that are at moderate-to-low risk. The law requires homeowners to have flood insurance if the properties are located in a high-risk zone and have a federally-backed mortgage. Homeowners are not required to buy flood insurance if they reside in a moderate-to-low-risk zone, though it may be a good idea to purchase it anyway. 

The bottom line is, even if you don't necessarily live in a high-risk zone, this doesn't mean your home won’t ever get flooded. Many conditions can result in flood damage, like clogged drain systems or flash rainstorms.

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