There are several myths surrounding flood insurance. Many people think that flood damage is covered in their home insurance but that is not true. If home insurance did cover floods, the government would not have to offer a flood insurance program separately.
Also, many homeowners believe that the damage caused by floods is usually minor and they can cover the repairs themselves. Only five inches of flood water can lead to $25,000 in property damage. According to FEMA the average claim for flood damage stands at around $43,000. Damage can be substantial in case of storms and heavy rainfall.
Here is a recent example: Tropical storm Florence wrecked and damaged millions of homes in the Carolinas which has resulted in $40 billion damage to property. The sad part is that only around 340,000 homes out of the 7 million aggregate had federal flood insurance.
Limited Areas Covered
Some people also believe that flood insurance is available only in Special Flood Hazard Areas. That is not true either. Federal flood insurance is available in over 22,000 communities that choose to participate. If you live in an area where it rains, there is always risk of flood. Living far from the coastline does not make your community safe against flooding. Beside storms and rainfall, there are other dangers that can lead to floods such as broken dams, melting snow and clogged storm drainage network.
Only High Risk Areas Vulnerable
Many think that they should worry about flooding only if they live in high risk areas. Twenty percent of NFIP flood damage claims come from those who live outside the high risk zones.
Federal Disaster Assistance
Many people believe that they will receive federal assistance in the event of disaster. They don’t realize that assistance will be provided only if the president issues a Presidential Disaster Declaration. Many flood incidents do not get such declarations. Even if a Presidential Disaster Declaration is made, the assistance will be in the form of low interest loans that must be repaid eventually.
Flood insurance covers you from such debt. You pay the premium, and get your house restored to its pristine condition.
Low-Risk Areas Coverage is Expensive
Flooding can happen in low risk areas by factors mentioned previously. But since chances are low you will definitely be looking for cheaper insurance. You can therefore apply for the low-cost preferred risk policy that will provide coverage for your building and its belongings if it meets requirements.
The Value of Flood Insurance
The NFIP policy will provide insurance coverage up to $250,000 which is substantial. Coverage will be provided on the following basis:
Actual cost basis: your reimbursement will include the material cost less the depreciation.
Replacement cost basis: you will be reimbursed with an amount according to the current cost of construction and new materials.
Please note that possessions such as appliances and furniture won’t be covered so you will have to purchase coverage for your possessions separately.
Don’t leave your precious home unprotected. Seek the advice of an independent insurance broker to understand more about flood insurance terms and conditions. For more information, feel free to contact us at C.K. Ash Insurance.