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Flooded with Worry? What You Need to Know About Flood Risk and Insurance

Flooded with Worry? What You Need to Know About Flood Risk and Insurance

Although we’ll be saying goodbye to those April showers this week, you can never be too prepared for the unfortunate event of a flood at your home. Have you even considered the possibility that your home could flood? If not, there are some things that you should know.

First of all, you don’t have to live in a flood plain for your home to flood. Mother Nature is often unpredictable, so if you live in an area prone to heavy rain or snow, there is a possibility that your home could flood. Even if you live near a levee or dam, there is a chance that the barriers could fail and unleash a fury of water!

Although you don’t have to live in flood plain to experience a flood, many people do live in flood plains. How do you know if you do or not? The Federal Emergency Management Agency (FEMA) designates areas that are flood hazards. However, these areas are constantly changing. To find out if you live in a flood hazard area, you can review FEMA’s maps or a lender may be able to help you determine your flood risk.

So, recognizing the possibility of a flood at your home is a great first step. What comes next? Obviously, you cannot prevent flooding; but, you can be prepared for it.

What is Flood Insurance?

Homeowners who live in a flood plain will likely be required by their mortgagors to purchase flood insurance. Contrary to what one might think, flooding is typically not covered in a conventional homeowner’s insurance policy.

But, what if you rent a home that is in a flood plain? Your landlord likely has flood insurance, right? Keep in mind that your landlord’s flood insurance will not cover your personal belongings, although they are inside of his or her home. It may be a good idea for you to purchase your own flood insurance policy.

How Much Flood Insurance Do You Need?

How much flood insurance coverage you need is dependent on the value of your home and/or belongings. In fact, not all flood insurance policies cover personal belongings, even if they cover a home’s structure. Further, flood insurance coverage limits are mandated by the National Flood Insurance Program (NFIP).

According to the NFIP, residential property structures are covered up to $250,000 and personal items are covered up to $100,000. Businesses are covered at $500,000 for building structures and $500,000 for all contents.

With these limits, it is clear that some homeowners may need to take out additional policies to cover all of their belongings. Knowing your flood insurance policy is crucial for guaranteeing total protection from flooding.

How Much Does Flood Insurance Cost?

The cost of those flood insurance policies depends highly on a home’s flood risk. Proportionately, the lower the flood risk, the lower the annual flood insurance premium. Of course, you can shop around different insurance agencies to find the policy that is best for you and your home.

One final note on flood insurance. If you’re considering a flood insurance policy, take action before a flood actually occurs. There often is a 30-day waiting period before flood insurance policies go into effect. Sadly, waiting could leave you and your belongings all wet while you’re running your bank account dry as you recover. In fact, as we say goodbye April showers for another year, now may be the perfect time for you to evaluate your home’s flood risk and consider your flood insurance options.