3 Reasons to Purchase Flood Insurance On Top of a Homeowners Insurance Policy

What will you do if your home sustains water damage after a storm? Homeowners insurance does not include flood insurance, so it's important that you find another way to protect yourself if water damages the structure and contents of your home.

Since homeowners insurance policies don't cover flood damage, the National Flood Insurance Program (NFIP) and several private insurers offer limited coverage. Be prepared and purchase your policy before an impending storm shows up on the radar screen. It usually takes about a month for a flood insurance policy to go into effect.  

If you purchase an NFIP policy, you may need additional coverage. And in some areas, NFIP isn't available. In these cases, private insurers that offer flood insurance can help get you covered.

Low-Risk Flood Zones Need Flood Insurance, Too

According to the official website of the NFIP, homeowners living outside high-risk flood areas file almost one-quarter of all flood damage claims. They also receive one-third of all federal disaster assistance for flooding. A Preferred Risk Policy provides coverage for homes and belongings in low to moderate-risk areas for less than $150 annually.

You never know if you'll encounter flood conditions, even if you're located outside of the high-risk flood areas. Hurricanes and tropical storms that continue inland past the coast cause severe flooding. They bring heavy rains that continue for long periods of time.

Although coastal areas are at a higher risk than inland properties, moderate-risk and low-risk areas can also experience damage caused by floods. Some areas may have poor drainage systems that don't allow storm water to drain properly. Sometimes a quick accumulation of snow followed by rising temperatures creates a flooding situation from melting snow. Water manes break, causing damage to surrounding properties in any area. If you live on or near a hill, mudflow (a covered peril under NFIP's standard flood insurance policy) can cause tremendous damage to your home.

Flood Insurance May Be Required by Lenders and the Law

When you live in a high-risk flood zone, the law requires that you purchase a flood insurance policy. This coverage is also required in order to qualify for a mortgage.

Keep in mind that a lender may require flood insurance no matter where you live. This is a good idea anyway, since a Preferred Risk Policy is an affordable way to protect yourself. Also, flood zone maps are revised every so often and the risk factors of your property may change over the years.

Federal Disaster Assistance Isn't Intended to Cover Flood Damage

Don't depend on federal disaster assistance to pay for damage done to your home due to local flooding. Even though it's called federal assistance, it's really a low-interest loan that is intended to help cover the cost of repairs. This loan must be repaid, and should not be considered a grant. Also, keep in mind that federal disaster assistance is available only when the president declares the site a disaster.

If you've already received federal disaster assistance, you need to purchase flood insurance and remain covered for as long as you own the property. If or when you sell, you must tell the new owner that she must get flood insurance coverage. Without this necessary coverage, any future federal disaster assistance may be denied.

No matter where you live according to the flood zone map, flood insurance can save you money and headaches in the future. There are many ways in which your home may incur water damage, including heavy snows, backed-up drainage pipes, and cracked water manes. Since homeowners insurance does not include flood coverage, it's crucial that you purchase a separate policy to keep yourself protected.

Bio

Laura Ginn understands that where you live can greatly influence the price you pay for insurance, and at the same time influence the level of cover that a policy provides. If you live in an area prone to flooding it makes sense to look into extra flood insurance while you are sorting out your cheap house insurance.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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