A natural disaster is a homeowner’s worst nightmare. Unfortunately, for many property owners in America, these nightmares often become reality. But that’s why insurance policies exist.
In 2018, insured losses due to natural disasters equaled $52 billion in the United States. The greatest losses were due to severe thunderstorms, winter storms, and flash floods.
Investing in a property can be risky, but home and business owners lower their risk through insurance policies. Flood insurance protects properties from catastrophic water damage. It provides owners with peace of mind knowing their assets are safe.
What is flood insurance? Why do I need flood insurance? What will my flood insurance policy cover? Keep reading to have all your flood insurance questions answered.
What Does Flood Insurance Cover?
Flood insurance is a form of property insurance. It covers water damage and losses. Flood insurance is designed to protect the things a person values. Policies are available for residential and commercial use.
Flood insurance covers a business or individual for losses due to:
- Flooding or prolonged rain
- Coastal storm surges
- Melting snow
- Blocked storm drains
- Levee dam failure
Pricing structures vary based on location. The National Flood Insurance Program uses flood zones, elevations, property age, and the number of floors to establish a property’s flood insurance rate.
The NFIP offers flood insurance to homeowners in NFIP-designated flood areas. For these locations, private insurers supply insurance, but the government sets the rates.
Policies are divided into building coverage and content flood insurance coverage.
Building Flood Insurance Coverage
Building coverage protects a business or residential property’s essential furnishings and systems. It covers large appliances, such as furnaces, water heaters and pumps, fuel tanks, refrigerators, and stoves.
It protects carpeting, cabinets, window blinds, and solar equipment. Building flood insurance covers electrical plumbing and electrical systems, as well as the property’s foundation.
Content Flood Insurance Coverage
Content coverage protects personal belongings, like clothing and furniture. Content flood insurance covers washers and dryers, curtains, and small appliances. The insurance plan also protects valuable items, like artwork and sculptures, up to $2,500.
How Does Flood Insurance Work?
Home and commercial property owners must know how to find flood insurance. If you don’t live in an NFIP-designated flood area, you should purchase private market flood insurance.
Most private insurers offer primary flood insurance, which is similar to a standard NFIP policy. Excess flood insurance policies provide extra levels of protection. These plans are recommended for people with expansive properties or with highly valuable (over $2,500) items.
Flood insurance operates similarly to other insurance policies. The insured property owner must pay a yearly premium. The rate is determined by the property’s flood risk and the deductible.
After a flood or storm, the policyholder will receive payment to replace damaged items or rebuild the property. The insurance provider will supply money up to the policy’s limit.
Why Do I Need Flood Insurance?
Why do you need flood insurance? Ninety percent of natural disasters in the United States result in flood damage.
But natural disasters aren’t the only reason for water damage. Flood damage occurs from snow, prolonged rain, and broken storm drains. Therefore, all property owners need flood insurance.
Flood insurance is a form of asset protection. It prevents permanent damage to your property and its contents. Flood insurance boosts your home’s value and gives property owners peace of mind. Without flood insurance, you risk losing everything you own.
For some property owners, flood insurance isn’t a choice. High-risk regions have a 1% chance of flooding every year. Properties in these areas must be protected with flood insurance. Read more about high-risk areas, like Texas, and the damage floods create.
Moderate-to-low-risk areas have a less than 1% risk of flooding. However, property owners in these regions are still encouraged to purchase flood insurance to protect their assets.
Undetermined risk areas are question mark regions. While the flood risk is unknown, flood insurance is still encouraged. Most of the homes destroyed by Hurricane Harvey in 2017 were located in undetermined risk areas.
Flood insurance claims are paid even if your area isn’t declared as a disaster region, which differs from disaster insurance coverage. Flood insurance is affordable, with the average cost being $600 or less a year for moderate-to-low-risk areas.
Responsible property owners invest in flood protection to ensure their loved ones, homes, and businesses are taken care of.
How Can I Prevent Flood Damage?
Not everything is out of a property owner’s control. There are things you can do to prevent and lower your risk of flood damage.
If your home or business is located in a high-risk flooding zone, raise your building using stilts or piers. One inch of rain can create $25,000 worth of property damages. Every inch you raise your home or business saves money.
Foundation vents or a sump pump improve water flow. The appliances prevent water build up around our home by creating a water flow outlet. Consider investing a battery-operated sump pump that can continue working if the power goes out.
Keep electrical outlets and switches on higher levels. Circuit brewers, switches, and sockets should be one foot above flood level. If not, a flood can create horrendous electrical damage on top of the water damage.
Protect other appliances like generators, water heaters, and AC units by keeping them above flood levels, too. Keep your gutters and storm drains clean to prevent backups. Use sandbags to block gaps that lead to flooding.
Move valuables to higher floors during a severe storm or hurricane. If water is flooding from a specific water source, shut it off immediately.
Flood Insurance is Important
Are you still wondering why do I need flood insurance? The answer is simple. Flood insurance is protection!
Flood policies reduce the risk of owning real estate. They aid property owners in recovering from water damage that is out of their control.
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