You may think that your current homeowners policy has you protected, but under certain circumstances you may discover to your horror and to your devastating financial loss that your insurance was not sufficient.
Risk
One in five American homes is at risk of flood damage. These are the people that should buy flood insurance. Still, even if you have a small risk of being flooded, the extra coverage could protect you in that event that an extremely rare flood event takes place.
Because private insurers do not insure against flood loss, the federal government created the National Flood Insurance Program in 1968 to help homeowners avoid catastrophic loss. This program has helped hundreds of thousands of Americans, with an average claim of $30,000 paid out.
Maps
The Federal Emergency Management Agency provides official maps to help homeowners determine and assess risk. A visit to FloodSmart.gov can help you discover whether you are at risk of a flood.
To learn your risk simply plug in your street address and your city, state and zip code. Identify if your home is residential property and choose whether it is your primary residence or not. Hit the submit button. You’ll then be given insurance estimates based on your contents only, your building only or both building and contents. The cost for contents coverage is from $49 per year and for building and contents from $129 per year.
Even if you live in a high risk area, you may find that flood insurance will cost you only $500 per year, a small amount to pay when compared to what you could lose in a flood. And that loss might be total.
Limits
Flood insurance can provide coverage, but there are limits in place. The NFIP dwelling form offers coverage for up to $250,000 on building property and up to $100,000 for your contents. Clearly, you may find yourself vulnerable if your home and or its content are above those limits.
You should also keep in mind that deductibles are a factor. Just like other forms of insurance, if you assume greater risk — that is, you agree to a higher deductible then your premiums will come in lower. For some homeowners, a high deductible is there only consideration as their premiums can cost thousands of dollars.
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Coverage
The insured building and its foundation are covered by flood insurance. The coverage also extends to electrical and plumbing systems, HVAC systems, appliances, carpeting and flooring, window blinds, detached garages and debris removal.
Personal contents covered include furniture, electronics, curtains and clothing. Portable appliances including washers and dryers, freezers and food, and certain items of value including artwork and furs are covered up to a maximum of $2,500.
Considerations
Keep in mind that currency including money, stock papers and precious metals are not covered. Moreover, anything on your property that is outside of your home or garage including a shed, gazebo, your swimming pool and landscaping are not covered. Flood insurance does not pay for your living expenses once displaced or interruption to your business. Your vehicles and other motorized conveyances are not covered either.
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