In the last two decades, flooding has accounted for 43 percent of all-natural disasters in the United States. That makes flooding the most frequent natural disaster in the US by far.
The effects of flooding can be devastating. Each year, this type of disaster drives over 75,000 Americans from their homes.
Unfortunately, there’s nothing we can do to prevent flooding. However, there are steps homeowners can take to prevent flooding from ruining them financially if most of their wealth is tied up in their homes. Taking flood insurance program NFIP coverage is one of them.
In this comprehensive guide, we tell you all you need to know about flood insurance. Read on to learn more.
Table of Contents
What Is Flood Insurance?
Flood insurance refers to insurance that covers a property for losses that result from water damage due to flooding. This flooding may result from prolonged or heavy rain, coastal storm surges, melting snow, levee dam failure, or blocked storm drainage systems.
How Much Is Flood Insurance Per Year?
The NFIP regulates the pricing of flood insurance policies. Generally, the cost is the same between issuers. Getting an insurance agent can be a smart move when determining your policy cost, whether you live in flood zones and NFIP-participating communities or not.
Your insurance agent looks at certain factors to determine your policy cost, including your home’s location and structure, its age, how many floors it has, flood zone designation, and the type of coverage you’ve selected.
So, what should you expect to pay? Annual insurance premiums vary, but the average cost of an NFIP policy is $699 per year.
How Does Flood Insurance Work?
To make an informed decision on whether or not to buy flood insurance, it helps to know how this policy works.
First of all, flood insurance differs from the basic hazard insurance contained in your homeowners insurance coverage.
Your homeowners insurance may cover water damage that results from a burst pipe, a rainstorm, or a tornado. However, this policy typically doesn’t cover damages resulting from floodwaters. If you own a property prone to that type of natural disaster, you may be required to have flood insurance.
Flood insurance functions like other insurance policies in that the insured homeowner or business owner pays annual premiums depending on the property’s flood risk and the specific deductible they select.
In the event that your property or its contents are destroyed in a flood resulting from an external event, such as rain, snow, or a storm, you receive cash to repair or rebuild your property, up to your policy’s limit.
What Does Flood Insurance Cover?
Flood insurance covers numerous things in your home, including:
- External systems in your home, including plumbing systems, electrical systems, water heaters, furnaces, central hair conditioners, sump pumps, solar energy equipment, and water tanks
- Appliances, such as ranges, refrigerators, washing machines, portable air conditioners, dryers, and freezers, plus the food they contain
- Window treatments such as curtains and blinds
- Paneling, cabinets, bookcases, and wallboard
- Foundation walls and anchorage systems, as well as staircases
- Detached garages
- Personal property, including furniture, clothing, and electronic equipment stored in the basement
- Certain valuables, such as fur and original artwork, valued up to 2,500
- Certain events that aren’t strictly flooding, such as mudflow or groundwater seepage
What Is Not Covered by Flood Insurance?
Flood insurance has many exclusions, including:
- Damage resulting from moisture, mold, or mildew not attributable to flooding or that the property owner could have avoided
- Damage that results from earth movement, even when a flood caused that movement
- Loss of access or use of the property
- Additional living costs, including temporary living as the property gets repaired
- Financial losses that result from business interruption
- Precious metals, currency, and valuable papers, including stock certificates
- Belongings and property outside of the insured building, including trees, fences, and swimming pools
- Self-propelled vehicles, including cars and their parts
Is Flood Insurance Worth the Money?
Given the several insurance policies you probably already have, it’s understandable to wonder whether you should saddle yourself with an additional policy to cover you for the various types of floods that may occur in your area.
The truth is, flood insurance is worth investing in. Here are some of the reasons why:
It Protects Your Property
Water damage from flooding can cause severe destruction. According to the Federal Emergency Management Agency (FEMA), one inch of water is enough to cause damages surpassing $25,000 to your home. Flood insurance can help cover those damages.
It Boosts Your Home’s Value
Even if you don’t live in high-risk flood zones, getting flood insurance can still benefit you in other ways. Being proactive in protecting your home communicates that you’re someone who cares for their property. When the time comes to sell your home, this could be a huge selling point.
Securing the Policy Is Easy
Some property owners have the misconception that buying flood insurance is a complex and lengthy process. The truth is the coverage is one of the most straightforward and affordable insurance products. You only need to find an insurance agent to help you create a policy that’s perfectly tailored to your needs.
How Can I Lower My Flood Insurance?
As we mentioned earlier, the insurance premium you pay depends on a variety of factors. But that doesn’t mean that you can’t lower that premium. Here are a few suggestions on how to do it.
Reduce Your Flood Risk
When you mitigate your flood risk, you make your home safer, which can help lower your flood insurance costs. Some flood risk reduction options include elevating your utilities, filling in your basement, installing flood openings, and elevating your house.
Opt for a Higher Deductible
The decision regarding your insurance deductible is essential. The higher the deductible you choose, the lower the premium you’ll have to pay. Of course, that means that you’ll cover a higher cost to repair or rebuild your property in the event of a flood.
How Do You Get Out of Flood Insurance?
A flood insurance policy may be terminated mid-term or full-term by a cancellation. The policy may also be terminated full-term by nullification. You can request for cancellation or nullification of your NFIP policy by giving specific reasons outlined by the NFIP.
You’ll need to submit a completed Cancellation/ Nullification Request Form to the insurer, along with the required documentation. Once your request is completed, your insurer will give you and any other interested parties a notice of cancellation/nullification.
Does Renters Insurance Cover Flooding?
No. Renters insurance protects your belongings from certain risks, also referred to as perils, but flood damage isn’t one of them. In case you suffer loss as a result of a flood, and you don’t have flood insurance, you’ll need to pay out of pocket to cover it.
How Much Flood Insurance Do I Need?
Generally, you want to have adequate insurance to help cover the costs of rebuilding your property in the event of damage by a flood. Coverage by NFIP is capped at $250,000 for your home and $100,000 for its contents. If you’d like more coverage than that, there are private insurers who can provide it.
Do I Need Flood Insurance?
The importance of flood insurance cannot be overemphasized. Even if you live in a lower-risk zone or your mortgage lender doesn’t request that you get a policy, it’s still a wise decision to get one.
FAQ’s About Flood Insurance
Is Flood Insurance Mandatory?
If you own a home that falls in a high-risk flood area and has a mortgage from an insurance lender who is federally regulated, your lender is mandated by law to require you to have a flood insurance policy.
Who Is Eligible for National Flood Insurance?
Property owners living in communities that participate in the National Flood Insurance Program (NFIP).
What Are High-Risk Flood Zones?
Also known as Special Flood Hazard Areas (SFHAs), high-risk flood zones are areas highly susceptible to flooding. In these areas, there’s at least a 1 in 4 chance that flooding will occur during a 30-year mortgage.
How Do I Buy Flood Insurance?
Talk to a participating insurer or agent. You can find such an insurer or agent using NFIP’s website.
Will I Get a Refund if I Cancel My Policy
Upon the cancellation of your policy, you may be entitled to a full, partial, or no refund.
Get Flood Insurance Program NFIP Today
Predicting when flooding will hit your area is impossible. That’s why it pays to prepare for it in advance. By taking an adequate flood insurance program NFIP, you can ensure that your property and loved ones are protected when the unexpected does happen.
Are you interested in insurance solutions tailored to your needs? Please, contact us today to learn about our offers.