Floods are the most common and costly natural disaster in the United States. Unfortunately, most homeowner or renter insurance does not cover flood damage. Flood insurance can be purchased through an insurance agent or an insurer participating in the National Flood Insurance Program (NFIP).
If you’re wondering why you might need flood insurance, remember that flooding can happen unexpectedly and happen anywhere. More than 20% of flood claims come from properties outside the high-risk flood zone. Additionally, flood insurance covers damage even without a Presidential Disaster Declaration. You may also be required to have flood insurance by either Congress or your mortgage lender. In high risk areas, Congress has mandated federally regulated or insured lenders to require flood insurance on mortgaged properties. Even in lower risk areas, mortgage lenders may require flood insurance. The bottom line is that flood insurance is a small price to pay for what could be thousands in potential damage. Just one inch of flood water could cost you over $25,000 in repairs.
When purchasing flood insurance, it is important to ask what is and isn’t covered. For homeowners, flood insurance policies typically cover water damage your home’s structure and belongings. This includes your foundation, electrical and plumbing, finishings, appliances, electronics, personal belongings, and more. Coverage limit is typically $250,000 for the building and $100,000 for the building contents. However, these are typically purchased separately with separate deductibles. If you reside outside the high-risk flood zone, you may be eligible for discounted flood insurance rates.
For business owners, you may purchase commercial flood insurance policies to protect your business’ structure and equipment. Coverage includes your foundation, electrical and plumbing, finishings, equipment, furniture, and inventory. Coverage limit is typically $500,000 for each building and the building contents. Just as with homeowner flood insurance, you may be eligible for discounted rates if you live outside of a high-risk flood zone.
After purchasing flood insurance there is a 30-day waiting period until your policy goes into effect. Here are the exceptions:
There is no waiting period, when flood insurance is purchased in connection with making, increasing, extending, or renewing a mortgage loan.
There is no waiting period if additional insurance is selected as an option on the insurance policy renewal bill.
If the building has just been designated in the high-risk Special Flood Hazard Area (SFHA) and flood insurance is purchased for it within the 13-month period following a map revision, there is a 1-day waiting period.
If a property is damaged by flooding on burned federal land and the policy is purchased within 60 days of the fire-containment date, there may be no waiting period. Waiving of the waiting period is determined at the time of claim.
“Buying Flood Insurance.” Flood Smart, Department of Homeland Security, www.floodsmart.gov/flood-insurance.
“How Do I Buy Flood Insurance?” How Do I Buy Flood Insurance? | FEMA.gov, Department of Homeland Security, www.fema.gov/national-flood-insurance-program/How-Buy-Flood- Insurance.