No home is completely safe from flooding. The question is not if, but when your home will experience a flood. Unfortunately, many homeowners do not realize the danger of flooding and the damage it causes to their home.
A recent article from The Center for Insurance Policy & Research discusses the rise in flooding rates over the last few years and claims attributed to the rise in weather-related disasters. So, even if your area is not considered a flood zone, you still may need flood insurance.
Still unsure if flood insurance is vital for your living situation? Here are some key questions and considerations to help you make this important decision.
What is Flood Insurance and how does it helps?
Flood insurance is a type of property insurance that covers the damage to your home and possessions in case of flooding. Flooding can be caused by many things, but most floods happen when rainfall exceeds the ability of drainage systems to carry it away.
A few common triggers include:
- Melting snow
- Broken water mains
- Sewer overflows
- Ice or sleet jams
Flood insurance is different from regular homeowners’ insurance in a few ways. For Instance flood insurance covers the damage to your house and your possessions if they are physically damaged by water from a flood. On the other hand standard homeowners’ insurance only pays for damage that occurs as a result of flooding, such as electrical repairs if appliances were submerged in water from a burst pipe.
Flooding can result in extensive damage to your home and possessions, so it is important to protect yourself with the right policy. In some cases, you may need to buy both flood insurance and homeowners’ insurance if your home is located in a designated flood zone.
What does Flood Insurance Cover?
Flood insurance is a unique type of homeowners’ policy. It does not replace your regular insurance but it supplements it. Basically, flood insurance policies include two components: the actual flood policy and an endorsement to your homeowners’ insurance.
The First Component i.e. the flood insurance provides you with coverage if your home is damaged from a flood as well as coverage for your personal belongings stored anywhere in or around your house.
The Second Component is the endorsement. This simply means that you buy your existing homeowners’ insurance policy and extend it to cover damage from flooding. Endorsements tend to be expensive, but worth it if you live in a high-risk area. This means they can cost hundreds of dollars, depending on your home’s location.
- Coverage for structural damage to your house and its foundation if your property is severely damaged by flooding.
- Coverage for damage to appliances, furniture, carpeting, etc. caused by flooding
- Damage to your house’s electrical system if it is submerged in water
- Additional living expenses if you are forced to live somewhere else while your home is being repaired or rebuilt
- Costs to remove debris caused by flooding on your home.
However, if you do not have an endorsement, these extra costs may not be covered by your homeowners’ insurance policy.
Who Needs Flood Insurance?
Although low-lying areas are the most vulnerable to flooding, no home is completely safe from it. There are many factors that can determine whether you need flood insurance or not. The first factor is your location, specifically your proximity to a body of water. The chances of experiencing flooding increases if you live in an area with high water tables or close to rivers, creeks or the ocean. This is because these areas are prone to flooding during heavy rainfalls and storm surges.
The second factor is your home’s flood risk, particularly if it was built before flood insurance became mandatory by the National Flood Insurance Program for all homeowners in high-risk areas. You can look up flood maps that highlight flood zones where you live, or you can check your homeowner’s insurance policy. If you find that your home is situated in a flood zone, then you need flood insurance for your property.
The third factor is the value of your house and its contents from the standpoint of rebuilding it after flooding damages it. If your home and possessions have a great deal of replacement cost, then it is advisable to get this policy. If you decide not to, then you should at least have a property appraisal done so that your home will be adequately insured.
Why Do I Need Flood Insurance if my Home is not Located in a Flood Zone?
Many homeowners who live outside of high-risk flood zones wonder why they need flood insurance. The truth is that even if your home is located more than 500 feet away from the nearest body of water, you still might be at risk for flooding. This is especially true if you live in a low-lying area or one with poor drainage.
In these cases, your home is not located inside a designated flood zone but it can still be damaged from flooding. In addition, inland floods caused by excessive rainfall and snowmelt cause millions of dollars in damage each year. Even if you don’t have a mortgage and your home is paid off, the cost to repair the damage from flooding may exceed your savings.
How much does Flood Insurance Cost?
The most significant factor in determining your flood insurance cost is the location of your home. If you live in a high-risk area, then you will have to pay more for flood insurance compared to homes that are outside of these areas. The amount you will have to pay depends on the federal government’s Flood Insurance Rate Maps (FIRMs) and your local government’s building and zoning codes.
Other factors such as the construction materials used to build your home, its age and number of floors will also affect your cost. For example, homes with cement foundations tend to be more expensive than those built on stilts or wood foundations. Homes that are elevated above ground level generally cost less because they take less damage during flooding.
If your home is located in a high-risk flood zone but was built before the FIRMs were drawn, then you may be required to buy a separate policy called Preferred Risk Flood Policy (PRP). The cost of PRP increases as you get older and as your home becomes closer to the high-risk area.
The same goes for properties where the value of construction materials and labor has increased. Homes that were built after the FIRMs were released are eligible for a Preferred Risk Policy (PRP) discount, which means they will pay less for PRP compared to homes that were constructed before the mapping was done.
How Do I Calculate How Much Coverage I need?
If you want to get the most affordable price for your flood insurance, then it is important that you make a few calculations before shopping around. The first calculation will estimate how much the damage from flooding will cost. This figure includes the cost of repairing or rebuilding your home and replacing its contents such as furniture, appliances and clothes. You should also include the cost to rent an apartment or house while yours is being repaired.
The second calculation will determine what percentage of your home’s value should be covered in case you cannot live in it for an extended period of time. Ideally, you should aim for around 50% coverage but 25-30% is the threshold that most insurance companies require before they sell you a policy. If you want to find out what percentage of coverage is suitable for your home, then it’s best if you call your local homeowner’s insurance agents in Texas and ask for help.
How do I Apply For Flood Insurance?
There are two ways to apply for flood insurance. You can do it either through a flood insurer or your current homeowner’s insurance provider. In most cases, you only have to make one call since most carriers sell both flood and home insurance policies.
You need to provide some essential information about your property such as the location of its main electrical panel and the number of floors it has. Your flood insurer will provide you with a list of additional information that is required and let you know if your home is located in a high-risk flood zone.
To Sum it Up:
Flooding does not only destroy property but it takes a toll on people’s lives as well. Flood insurance is an important part of your homeownership, so do not wait to apply until it is too.
Contact reliable Texas flood insurance companies today to find out more about how they can help you get the most affordable flood insurance to rebuild your home.