Floods are the most common and costly natural disasters in the United States. According to the Federal Emergency Management Agency (FEMA), floods cause more than $8 billion in damages every year1. Floods can affect anyone, anywhere, regardless of whether they live in a high-risk flood zone or not. In fact, more than 20% of flood claims come from properties outside the high-risk areas2. That’s why it’s essential to have flood insurance to protect your home and belongings from flood damage.
What Is Flood Insurance?
Flood insurance is a special type of insurance that covers your property and its contents from losses caused by flooding. Flood insurance is not included in your standard homeowners or commercial insurance policy.
The NFIP was created in 1968 to help reduce the impact of flooding on individuals and communities. The NFIP offers two types of coverage: building coverage and contents coverage. Building coverage pays for the repair or replacement of the structure of your home and its essential systems, such as electrical, plumbing, heating, and cooling.
Contents coverage pays for the repair or replacement of your personal belongings, such as furniture, appliances, clothing, and electronics.The amount of coverage you can get depends on the type and value of your property. The maximum coverage limit for building coverage is $250,000 for single-family residential buildings; $250,000 per unit for multi-family residences; and $500,000 for non-residential buildings. The maximum coverage limit for contents coverage is $100,000 for residential buildings and $500,000 for non-residential buildings3.
Why Do You Need Flood Insurance?
You may think that you don’t need flood insurance if you don’t live in a high-risk flood zone or if you have never experienced a flood before. However, that’s not true. Here are some reasons why you need flood insurance:
Floods can happen anywhere and anytime. Floods are not only caused by heavy rain or storm surges. They can also be caused by melting snow, overflowing rivers, broken dams, clogged drains, or new development that changes the natural drainage patterns. Even a few inches of water can cause significant damage to your home and belongings.
Floods are not covered by your standard insurance policy. Your homeowners or renters insurance policy may cover some types of water damage, such as from a burst pipe or a leaky roof, but it does not cover damage from flooding. Without flood insurance, you will have to pay out of pocket for the cost of repairing or rebuilding your home and replacing your belongings after a flood.
Flood insurance is required by law in some cases. If you have a mortgage on your property and it is located in a high-risk flood zone, your lender will require you to have flood insurance as a condition of your loan. If you don’t have flood insurance, your lender may purchase it for you and charge you for it, which may be more expensive than buying it yourself.
Flood insurance can help you recover faster and more completely after a flood. Floods can cause physical, emotional, and financial stress for you and your family. Having flood insurance can ease some of that stress by providing you with financial assistance to restore your home and replace your belongings. Flood insurance can also help you avoid taking on more debt or dipping into your savings to cover the cost of recovery.
How Can You Get Flood Insurance?
Getting flood insurance is easy and affordable. Here are some steps you can take to get flood insurance:
Check your flood risk. You can use FEMA’s Flood Map Service Center to find out if your property is located in a high-risk or low-risk flood zone.
There is usually a 30-day waiting period before your policy becomes effective, unless you are buying it in connection with a new loan or a revised flood map.
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