flood insurance

Do I Need Flood Insurance for My Property?

August 18, 2021

Flooding in the US from tropical storms has become a pressing issue. Back in 2019 flooding related damages cost the country almost 4 billion. Therefore, more and more people are flocking to get insurance for their properties.

Flood insurance is provided and regulated by the National Flood Insurance Program, which offers various plans according to the buyer’s premium amounts. Let’s discuss flood insurance in detail, so you can decide whether you need it or not.

What’s Flood Insurance?

It has the basics of any home insurance policy, and it protects the structure and belongings in your property if they’re damaged due to floodwater. This flooding can be caused by heavy rainfall, hurricanes, and also melting snow in the winters. Another reason why there could be floodwater is due to dams that fail to control the excess water, as well as blocked storm drains.

Flood insurance plans are becoming more and more common, mainly due to their extended coverage at very low prices. Recently, the NFIP introduced a new rating model and gave each property in the US a designated flood zone, which is divided into low, moderate, and high-risk areas. For homes that are in the high-risk areas and have a home loan or financing, it will be mandatory.

How Does It Work?

It’s similar to other types of insurance policies, in the sense that you pay a premium amount and are given money to repair the damages caused to your home in the event of a flood. The policy terms dictate how much money you will be given, or which damages can be repaired. The NFIP policy renews each year and has an upper bound of $250,000 for the home structure and $100,000 for the home contents.

However, private insurance providers may offer up to $500,000 for the home structure and $250,000 for its contents. If you choose to keep a high deductible to lower the premium, you may have to pay more from your pocket when you file a claim. It will take around 30 days for the policy to take effect, but this time can be shortened in a few scenarios, such as:

  • You change your home loan terms and buy flood insurance.
  • A wildfire resulted in flooding and you bought the policy less than 60 days before the containment of the wildfire.
  • Your home has just been declared it’s located in a high-risk flood area and you bought insurance within 13 months from the update.

Note, homeowners insurance policies don’t cover floods . You’ll need flood insurance added on for this type of coverage. 

What Does It Cover?

No matter who your provider is, the coverage remains almost the same. For instance, the structure coverage includes:

  • All sorts of home appliances
  • Installed fixtures and fittings
  • Separate garages
  • Electrical and plumbing systems
  • Solar and fuel-based energy systems

Moreover, the contents coverage includes:

  • Washing machine and dryer
  • Microwave
  • Curtains
  • Portable air conditioners
  • Furniture and kitchen accessories
  • Valuable belongings up to $2,500

Most items in a house aren’t covered under the plan, and these things include the items stored in the basement, vehicles, valuable papers and documents, outside fixtures, and damage caused due to moisture or mold.

As you can see, flood insurance is an essential policy that protects your home from damages due to flooding. It also saves you from the financial burden of having to pay everything out of pocket.