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While homeowners insurance is a valuable tool that helps protect your home and property from disasters and accidents, does not cover everything. Most standard homeowners insurance policies do not include flood coverage.
Even if you don’t live in a high-risk flood zone, it may be wise to get flood insurance, as floods can happen anywhere. More than 40% of flood claims received by the National Flood Insurance Program between 2015 and 2019 came from low- and moderate-flood regions, according to FEMA.
Here’s what you need to know about flood insurance and what it covers.
With Credible you can easily compare flood insurance quotes from leading insurance companies.
Although floods are the most common and costly natural disasters faced by homeowners, most homeowners insurance policies do not cover flood damage. You will need to purchase a separate flood insurance policy in addition to yours homeowners insurance policy to protect your home from water damage from flooding.
When flood insurance your insurance operator will bear the cost of repairing or rebuilding your home (after you pay the deductible), and will pay you the actual cash value of your damaged personal belongings. If you buy a policy from a private insurance provider, you may be able to cover your personal property at a replacement cost that is not deductible for depreciation.
With private flood insurance your coverage may vary depending on the supplier. The standard NFIP home flood insurance policy offers two types of flood insurance coverage:
- Construction Real Estate – This flood insurance policy covers the physical structure of your home for up to $ 250,000, including the following: electrical and plumbing systems, stoves, water heaters, home appliances, permanently installed items such as carpets, cabinets and bookcases, blinds and removal garbage.
- Personal property – This type of NFIP flood insurance covers items in your home for up to $ 100,000, including furniture, clothing, electronics, a microwave oven, washing machine, dryer, curtains, portable and window air conditioners, carpets, and valuable works of art and fur ( up to $ 2,500).
It is important to note that if you want to cover both your home and things, you need to purchase both types of coverage.
Whether you buy flood insurance privately or through NFIP, your flood insurance policy usually only covers damage caused directly by flooding. For example, your policy probably does not cover any financial losses you incur due to the inability to run your home business.
Other common exceptions to the flood insurance policy include:
- Housing and additional living expenses until your home is uninhabitable
- Any property outside your home including swimming pools, landscaping, wells, decks, patios and fencing
- Currency, precious metals or securities
- Cars, tractors, motorcycles and other self-propelled vehicles
Visit Credible to compare flood insurance quotes from various insurance companies.
Does flood insurance cover the basement?
Flood insurance provides almost no coverage of premises and basements. NFIP defines a basement as any room with four walls below ground level. According to this definition, a sunken living room or underground room can be considered a basement.
The Standard Flood Insurance Policy (SFIP) covers cleaning costs such as pumping flood water, cleaning from mold and mildew. SFIP also insures certain items attached to your home, and personal belongings connected to a power source. Elements of this policy include:
- Stoves, water heaters and air conditioners
- Fuel tanks
- Frame pumps, heat pumps and water tanks
- Electrical wiring, switch boxes, sockets and circuit breakers
- Elevators and containers
- Attached stairs and ladders
- Fundamental support elements
Remember that flood insurance does not usually apply to personal belongings in your basement unless they are connected to a power source. For example, this does not usually apply to furniture, clothing and generators in your basement. If you are unsure of the coverage of your policy, talk to your agent about exceptions and limitations to make a more informed decision.
If you purchase a home in a high-risk flood zone and you have a government-backed mortgage, your lender will require you to purchase flood insurance under federal regulations. Even if you live in a lower risk area, your lender may require you to have an additional flood insurance policy to protect your collateral on the loan.
FEMA defines high-risk flood zones as areas with a probability of flooding of at least 1% annually. These areas are called flood risk areas and they have at least a 25% chance of flooding during a standard 30-year mortgage period. FEMA manages and updates Flood Insurance Tariff Cards (COMPANIES) and makes them available to the public. These maps assess the risk and determine the likelihood of flooding in your area.
No matter what your lender requires, you may want to consider buying flood insurance to protect your financial investment in your home. According to FEMA, one inch of water in your home can cause $ 25,000 in damage.
The average cost of an NFIP insurance policy is approximately $ 700 per year, but you can purchase a policy for less than $ 500 per year if you live in a moderate or low flood risk area.
As with any type of insurance, yours insurance premium will depend on your risk. Factors that may affect your annual flood insurance premiums include:
- Flood zone
- Location, design and age of your home
- Flood cover type (building and / or contents cover)
- Coverage amount and deductible
NFIP issues most flood insurance policies. You can visit Website of the National Flood Insurance Program to see the participating insurance companies where you live.
You can too compare flood insurance quotes free with Credible.