Were you aware of the fact that your home has a higher chance of being affected by a flood than a fire? As a matter of fact, floods are the primary cause of natural disasters in the U.S. Most people do not know that standard home insurance does not cover damages caused by flood, only flood insurance will help you recover from the losses.
Who Needs Flood Insurance?
Floods are a result of hurricanes and torrential rainfalls. Flood insurance becomes necessary when you are living in a high flood risk zone, but since flooding occurs in inland areas as well, which are away from rivers and coastal areas, you need it there as well.
Features of Flood Insurance
Most policies provide the following three types of coverages:
1. Building Coverage
This coverage protects your buildings against physical damages for both residential and non-residential properties.
2. Contents Coverage
It covers your personal belongings and objects inside the house such as ovens, clothes and furniture.
3. Replacement Cost Coverage
This helps you to reimburse the cost of replacing your house. Only single family owners can get this insurance and about 80% of the total replacement price can be reimbursed.
There is a 30-day waiting period before the coverages comes into effect so do not wait for flood season to purchase the policy. This is also applicable to the changes made in the existing policy. This has been especially designed to prevent claiming coverage for losses that are in progress or if large storms are approaching. This period is not applicable to policy renewal.
What Is Covered And What Is Not?
Condos, homes, apartments, and even your businesses are eligible for flood insurance. Flood insurance policies are not as comprehensive as most homeowner policies. The policy generally covers dryers and washers, freezers and food inside them, stairways, water tanks, ceilings, oil tanks, walls and furnaces. The insurance company will pay for basic living expenses such as hotel and food while your home is being refurbished but it won't pay for any additional living expenditure. The flood insurance policy will extend to detached garages but you will have to pay for other structures if they qualify for coverage under a different flood policy. Policies also does not cover basement improvements and objects in basement.
Flood Insurance Limits
Insurance limits are the maximum amount the policy pays for sustained damages. If you meet losses greater than the policy limit then you are responsible for those. The National Flood Insurance Program (NFIP) insures structural elements of the building up till $250,000 for residential buildings and $500,000 on non-residential buildings.
Contents coverage according to the program insures belongings up to $100,000 for residential policies and $500,000 for non-residential policies. Policies are available for excess coverage if you want to cover for losses more than the defined limits of NFIP.