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Flood insurance, the basics: What you need to know

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Did you know that more than ninety-percent of all natural disasters that occur in the United States of America involves flooding? Some areas are more prone to flooding than others, including North Carolina, Massachusetts, Virginia, and New Jersey.

However, despite flooding on the rise and a common natural disaster, many homeowners are unaware that the majority of homeowner insurance policies do not cover flooding or flood water damage. For those that live in these particularly flood-prone areas, this is something you should be aware of - allowing you to purchase separate flood insurance in the event of flood damage to your property or personal belongings.

The FEMA (the Federal Emergency Management Agency) reported that flash floods and flooding from seasonal storms happen in every region of the United States, not just particular areas (although some areas are greater likely to flood).

If you have a big move coming up, it’s worth asking the homeowner or people in the local area whether or not it’s prone to flooding. Furthermore, the NFIP (the National Flood Insurance Program) also provides flood risk information for individual areas in the United States - so be sure to look this up prior to moving home.

Despite most flooding happening to more prone areas, flooding can happen regardless of where you live. Therefore, it’s important to be prepared, knowing your insurance options, and having a plan of action should your property be submerged in water.

Cutting back to the basics

Unlike traditional homeowner insurance policies, flood insurance is a little different. For example, flood damage is not covered under regular homeowners or rental insurance policies. You, therefore, need an individual flood insurance policy to compensate and cover your home for flood-related losses.

Often, flood insurance and the coverage for both the structure and contents of the property are sold separately. Structural flood damage is based on the cost of rebuilding, not the property value, whilst your contents/belongings are based on a cash value basis only. Regular flood insurance protects your property from general flood damage e.g. erosion as a result of waves or currents, severe storms, flash flooding, tide surges, and other similar scenarios and disasters.

Many people also don’t know that the majority of flood insurance is managed by the United States federal government. Whether your a homeowner, renter, or business, you can purchase different flood insurance packages from an insurance provider who has a contract verified with the FEMA.

You might be wondering: what’s the maximum flood insurance coverage for a property? The maximum flood insurance coverage is roughly $250,000 - this covers the structure of the home with a further estimated $100,000 for the contents of the property (e.g. personal belongings, furnishings etc.). However, your flood insurance will be based on your individual property, with a value calculated by your insurance provider in the event of flooding and flood damage.

What if there’s a flood and I don’t have flood insurance?

Often, when flash flood alerts are sent out, flood insurance is unavailable to purchase from insurance providers. This is to prevent home and property owners from buying it last-minute to protect their property, instead encouraging them to have it year-round in the event of a natural disaster.

Without a doubt, the best way to protect your property, whether home or business, is to purchase flood insurance, protecting your assets, family, and personal belongings.

If you do not have flood insurance and your property is damaged, or worse destroyed by flooding, you will likely have to rely on loans for restoration purposes. Occasionally, depending on the disaster area, these loans will be made available from the federal government. However, this is location dependant. Likewise, these loans must be paid back, so no matter what, you are responsible and will pay the cost for the entire flood damage to your property.

Purchase flood insurance today and avoid the worst-case scenario, racking up debt and losing your livelihood.

Purchasing flood insurance

Flood insurance is generally super easy to purchase. However, as previously mentioned, you usually cannot purchase this once flood warnings have been issued. Federal flood insurance policies can be acquired directly from certified insurance providers. Likewise, there is also usually a 30-day waiting time until the policy kicks in, so don’t leave this until last-minute, especially if the hurricane season is about to begin (see: June 1st to November 1st).

Flood insurance is also available for those who rent and is not exclusive to homeowners. In this scenario, flood insurance will cover your belongings, as the landlord will generally have flood insurance themselves in the event of a natural disaster.

So, what are you waiting for? Don’t get caught off guard, no matter where you live, flooding can happen. However, if you live in particularly prone areas then take action now and protect your livelihood, your family, and your assets.