The Basics of Flood Insurance
From summer rainstorms to full-fledged hurricane season, surprise floods and torrential downpours bring with them the possibility of flooded property and lost belongings. Even if you live in a low-risk area, many experts agree it is better to have a little coverage than no coverage at all. The options may seem confusing, but some basic knowledge will help you make the best decision for your home or business.
What is Flood Insurance?
Typically, a flood policy covers physical damage your property or belongings receive due to flood waters. The insurance typically covers the building and its foundation, electrical, plumbing, and HVAC systems, carpeting, paneling, and debris removal in the building, as well as clothing, furniture, electronics, some appliances, and some valuable items in your inventory. It does not cover mildew or mold damage that the owner could have avoided, nor does it cover items such as stock certificates, decks or pools, or loss due to business interruption.
Who Should Buy a Flood Policy?
You should buy flood coverage if you live in a high-risk flood zone; in fact, your mortgage lender may even require it. However, if your do not live in a high-risk zone and your community is part of the National Flood Insurance Program (NFIP), you only need to buy it if you choose to. It’s important to note that homeowners insurance does not cover flooding.
How Flood Coverage Works
Flood coverage costs anything from a few hundred to $10,000 per year, depending on your risk. It is especially important to purchase your insurance as soon as possible if you live in a high-risk zone, as it takes 30 days to go into effect. Homeowners can insure a home for up to $250,000 and belongings for up to $100,000 while businesses can insure a building and the inventory for up to $500,000 each.
Even if you don’t think you will need flood coverage, it’s wise to purchase at least a basic plan. A few hundred dollars per year is much cheaper than finding yourself with a flooded home and no insurance to replace your property or belongings.