Flood Insurance: What You Need to Know and How to Purchase Coverage

Floods and the resulting damage are the most common natural disaster.

While it may be the most likely form of weather or natural disaster to damage your home, flood insurance is virtually never included in standard homeowner’s insurance policies.

In order to be insured against flood damage, you must purchase a separate flood insurance policy.

Why is Flood Insurance Not Included in My Policy?

Despite the fact that flooding is the most common cause of damage to homes, only about 20% of the homes in the United States that are at risk for flooding are insured for flood damage.

It is the high likelihood that a flood will damage your home compared with the relatively low demand for the coverage that prevents insurance companies from being able to profitably offer flood insurance. Said another way, the number of people submitting claims for flood damage exceeds the number of people that want to purchase flood insurance.

How do I Purchase Flood Insurance?

If you want your home and personal property to be insured against flood damage, you will have to purchase a separate flood insurance policy. Also if your home is in a flood prone area, your mortgage may require you to purchase flood insurance.

Because most insurance companies cannot profitably offer flood insurance, the federal government, in 1968 created the National Flood Insurance Program which provides flood insurance, through participating insurance companies to homeowners.

The easiest way to find out if you qualify to purchase flood insurance is to speak with your insurance agent.

What Does Flood Insurance Cover?

Flooding is defined by the National Flood Insurance Program as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties (at least one of which is your property) from: Overflow of inland waters, unusual and rapid accumulation or runoff of surface waters from any source, and mudflows.

It’s important to note if a hurricane damages your roof, your homeowners policy will cover it but if that same hurricane caused flooding and that flooding damaged your basement, you will not be covered unless you have a separate flood insurance policy.

Flood insurance provides coverage for your home and personal property in a similar fashion as your standard homeowners insurance. Certain differences and exclusions (such as coverage for expenses while your home is being repaired) may apply. Like all insurance related issues, you need to check the language in your specific policy to verify coverage for a particular type of property.

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