If you live in a known flood plain area then it is usually a done deal that your homeowner’s insurance policy will include coverage for flood damage. If you don’t live in a place that is regularly flooded, you may not feel the need to take on what is often an expensive attachment to a policy; you should think again. It only takes one flood to destroy a property and everything you have worked for. If it is all destroyed by a flood and you don’t have flood damage insurance then you are left having to replace everything out of your own pocket plus pay on a mortgage for a house that may no longer exist or is condemned.
A flood won’t happen to me
Think about all the houses that were flooded during Hurricane Katrina but not structurally damaged and yet were condemned because of mold, floods happen. To get the best flood damage insurance you have to understand a few of the do’s and don’ts about it. Insurance companies don’t particularly like to make it easy to add on, which is one of the reasons it is expensive and they don’t like to do a separate policy if your other insurances are with another company. This is why most people then make the mistake of getting a policy with the NFIP.
What is the NFIP?
The NFIP is a division within the Federal Emergency Management Agency (FEMA) that offers homeowners separate flood insurance policies. This is not the best flood insurance to get. While it may seem more reasonable in price than going back to the company that carries your homeowner’s policy, in the end it may cost you much more.
What is the catch?
The NFIP policies come with payout caps that may not be enough to repair the damage or replace lost property. They limit payments to $250,000 on a house and $100,000 on property. That may sound like a lot but if you have two fairly new cars, there goes close to $70,000 of your property payment right away. There is also a hidden clause, not so much hidden as tucked away in the fine print that involves the definition of a flood.
A flood has to affect two or three adjacent properties to trigger the policy. So it will just be too bad if it is the storm drain in front of your house that overflows and everyone else is up hill. Some people will go out and get the NFIP policy despite all this and then buy an additional policy from a company that will be triggered when the NFIP compensation limits are reached. At no point in life is paying two different times to try and create one thing going to be cost effective. If you are looking to get the best flood damage insurance then you need to go to a private insurer and get a policy.
Who will sell me flood insurance?
Just about every private insurer will offer a insurance policy for flood damage. But think before you sign on for one that looks like it has a great price. While the company that holds your homeowner’s, life, indemnity, and auto insurance policies may list a higher price for a separate flood damage policy you should talk to your agent. They typically want to keep your business with them and may offer you a better rate.
What should I look for?
A good rate is not the only thing to look for in selecting a provider for flood coverage, you have to look at what conditions are attached to the coverage and what compensation is then issued. One phrase you need to learn to be very careful of is “Act of God” and “reasonable prevention.” Make sure you get a written definition of what an insurer intends by those terms. Many exclude coverage in the event of an “Act of God.” An example of an “Act of God” would be a hurricane hitting your area when there hasn’t been one to land in 100 years. “Reasonable prevention” may shift the blame for the cause of the flood to poor drainage or maintenance and release the insurer from obligation to pay.
Flood damage insurance plans are available for many water emergencies, but different scenarios exist for what is covered and the conditions under which it is covered. Knowing your water damage policy is the path to getting claims when you are affected by a disaster. It also enables you to know when not to bother filing any request for claims, as you would know how and when to use the right words. For instance, if the water heater or washing machine of your home bursts, flooding the whole place, it will not be regarded as one of the events which describe the occurrence of a flood; such situations are usually covered under a general property insurance policy.