What Should I Know About Flood Insurance?

What Should I Know About Flood Insurance?

Flood Insurance can be a very confusing insurance policy to navigate for any home owner. First, you find out that you are living in a flood zone and will be required to have the coverage by your mortgage company, and then you have to figure out how to get that coverage and just how much coverage is enough. If you are not in a flood zone, you may be thinking about the coverage anyway based on the unpredictable weather as of late. Whether you live in Connecticut, Massachusetts, or New Jersey even small lakes or ponds can cause a flood threat for you and your home. Allow us to break down some of the basics of flood insurance for you, and as always, if you have more questions, give our agents a call at 888.865.1244 and they can walk you through the policy.

Defining Flood Insurance

In order to get flood insurance coverage you must live in a community that participates in the National Flood Insurance Program (NFIP) and to be considered a covered loss, the body of water has to be deemed a flood by definition. What is a flood by definition? As defined by NFIP, it is a temporary or general condition of partial or complete inundation of two or more acres of normally dry land from: mudflow, overflow of inland or tidal waters, unusual or rapid accumulation or runoff of surface waters from any source, and a collapse or subsidence of land along the shore of a lake or other similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels.

The above is confusing, there is no arguing that. If you break down the definition it becomes a little easier to envision what is considered a flood. The key is that a large portion of your land that is normally dry is underwater from one of several particular situations. Mudflow is simple enough to understand and think of the overflow of inland or tidal ways for those that are closer to the ocean. The unusual or rapid accumulation or runoff of surface waters could be a number of different kinds of precipitation or water accumulating unexpectedly from a nearby body of water. Last, is probably the most extreme situation. This is if you live by water and experience waves and currents that can not only put your home under water, but potentially start to destroy the land around your home.

Coverage with Flood Insurance

Once you have the definition of a flood and flood insurance, it’s a great time to think about what would and wouldn’t be covered with flood insurance. When you purchase a flood insurance policy, you will have different coverage options that your agent can walk you through. They can help factor in your individual location, home, and overall situation. Typically you would purchase coverage for dwelling and contents to help protect your home and your belongings. If the damage meets the flood definition and you had the above coverages, you would have the coverage you need for your home and your possessions in the event of a flood.

Flood insurance is required by your mortgage company if you are lending and live in a flood zone. Even if you are not lending, if you are in a flood zone it is crucial. Failure to purchase flood insurance for those living in a flood zone could result in issues collecting government assistance in the event of a loss. When you are speaking with your agent about your home, be sure to mention things like if your home is elevated, is newer, or is built to mitigate floods. Having some or all of these features on your home could make you eligible for a discount with your flood insurance.

Some things to keep in mind that your flood insurance doesn’t cover are damages from moisture, mildew, or mold. It also does not cover property outside of the building. If you do have a shed or other things of value not attached to your home, mention this to your agent when you are getting flood insurance coverage. There is most likely a way to have those things added onto your policy. Your dwelling and contents coverage are separate so there is more flexibility than you think when it comes to coverage limits for those. Another important factor to keep in mind is that flood insurance doesn’t cover damage in the basement. This is true for basements and finished basements. However, there is coverage for machinery in your basement. This means that things like your furnace and hot water heater would be covered from flood damage.

Homeowner Flood Insurance Affordability Act

Flood Insurance can be costly for families in high risk areas and given the fact that they may be required to have it, this has been an issue. Recently President Obama signed a bill, the Homeowner Flood Insurance Affordability Act which will help to keep flood insurance affordable. It states that no policy can increase more than 18% over one year. It also calls on FEMA to attempt to reach the goal that most policyholders have a premium of no more than 1 percent of the value of their coverage. This would mean $2,000 for a $200,000 policy. The act is great news for those in flood zones all over the country and should help keep costs reasonable for flood insurance. The Homeowner Flood Insurance Affordability Act could be the difference between some people losing their homes or not. With things moving forward with that act, families can focus on the right coverage for their home and not have to worry about the cost being unattainable.

Talk with your agent about flood insurance today! For those living in a flood zone, the decision is most likely made as to whether or not to get coverage, but for those not in a flood zone, you may find yourself realizing it is a great coverage to have. Your homeowners insurance policy will not cover flood damage so having a flood insurance policy can give you peace of mind if you fall victim to a flood. Be sure to ask about difference discounts that you and your home may be eligible for when speaking with an agent as well! The right coverage is the most important part, but you also want to make sure you are getting great value with your policy.

Want to know more? Visit our Flood Insurance section.

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