You've
got house insurance, and assume your property is covered for any type of
detrimental occurrence that can possibly take place.
However,
not all homeowners are aware that home insurance policies don't necessarily
cover damage related to a flood, as the risks are too great. As a result,
homeowners must purchase flood insurance through a private company.
Floods
are one of the most common hazards in the US, costing billions of dollars in
damage to properties every year.
What Is Flood Insurance?
Flood
insurance policies are typically made available to homeowners in flood-prone
areas. The majority of insurance policies cover some form of water damage, from
things like leaking faucets to bursting plumbing pipes.
However,
such policies don't cover water damage as a result of flooding of rivers or
sewers that cause water to ruin a home.
Specific
flood protection is provided by the National Flood Insurance Program (NFIP), which
is run by the Federal Emergency Management Agency (FEMA). Standard flood
insurance policies cover "direct physical damage" to a property
resulting from floods.
A
separate policy must be purchased to protect the belongings inside the home or
building. Homeowners can buy up to $250,000 in coverage for the home, and up to
$100,000 in coverage for possessions. Even renters are permitted to purchase
flood insurance to cover their possessions.
How Does Flood Insurance Work?
Flood
insurance isn't sold by FEMA directly, but rather is sold to customers through
private insurance agencies. Premium rates are determined by the government, and
they remain consistent from one insurer to the next.
How
much a homeowner pays for their own specific flood insurance depends on a
number of factors, including how prone the neighborhood is to floods and how
much coverage a homeowner wants. The average annual premium is approximately
$520 for $100,000 worth of coverage for a property with no basement, and
approximately $615 annually for a property with a basement.
Filing A Flood Insurance Claim
The
claims process is like any other insurance claim. Once the claim is filed, the
damage will be analyzed by an adjustor assigned by the insurance company. A
"proof of loss" form will need to filled out and submitted to the
insurer within 60 days of the flood occurrence.
Do You Need Flood Insurance?
It's
necessary to find out if you are eligible for flood insurance before buying it.
For residents of a community to be eligible, the community needs to enforce
floodplain statutes to lessen the chances of flood damage, after which FEMA
ensures that such regulations are followed.
Only
those who reside in a community that participates in NFIP can buy
insurance—today, about 20,000 communities across the country participate in
this program.
FEMA
offers maps that outline what areas are at high risk for floods, and those that
are at moderate-to-low risk. The law requires homeowners to have flood
insurance if the properties are located in a high-risk zone and have a
federally-backed mortgage. This is because properties located in these
high-risk areas have a 26 percent chance of suffering flood damage during the
30 years that it would take to pay off a mortgage.
Homeowners
are not required to buy flood insurance if they reside in a
moderate-to-low-risk zone, though it may be a good idea to purchase it anyway.
Properties outside the high-risk areas make up over 20 percent of NFIP claims.
Homeowners in these areas can purchase up to $200,000 in flood insurance.
The
bottom line is, even if you don't necessarily live in a high-risk zone, this
doesn't mean your home won’t ever get flooded. Many conditions can result in
flood damage, including clogged drain systems, flash rainstorms, and damaged
levees.
If you're
contemplating whether or not to buy flood insurance for your home, call your
trusted real estate professional today for more information.
-Jeff Cook
Jeff Cook Real Estate
Charleston, SC
