The Different Types of Flood Insurance That Homeowners Get Today

The Different Types of Flood Insurance That Homeowners Get Today

Did you know that floods are the most prevalent natural disaster? One of the reasons they are so common is that various weather conditions can cause them, such as rain, snow, or storms. And, they can also result when dams overflow.

In many cases, floods come without warning, leaving you little time to collect your belongings and get to safety. And, because they cause a lot of damage to personal property, it’s important to have good insurance to make sure your possessions are covered.

This post will analyze the different types of flood insurance that exist! So, please keep reading to learn what they are and how to select the right one for your home!

Does Homeowner’s Insurance Cover Floods?

If you have homeowner’s insurance, you may think that you’re covered in the event of any incident, including floods. Of course, your homeowner’s insurance may protect you from water leaks or floods caused by plumbing damage. However, even the best homeowners insurance doesn’t cover natural floods.

Most types of homeowners insurance don’t cover these types of natural disasters because they devastate entire areas. Plus, the average claim is over $50,000! Covering a flooded area all at once would cause insurance companies to go broke trying to pay out many hefty claims.

What is Flood Insurance?

Flood insurance is a stand-alone policy in the insurance industry that covers your property and belongings from flood-related damage. However, it doesn’t usually cover other disasters caused by rain, such as mudslides.

Usually, there is a waiting period that applies to flood insurance policies. However, if there is a disaster within this period, it may be waived.

So, for example, if you’ve just bought a home or live in a zone that has recently become at risk for flooding, you may still be covered by your new policy.

Who Should Get Flood Insurance?

As a homeowner, it’s up to you to decide whether you need to get a flood insurance policy. However, there are several reasons that you should prioritize flood insurance. Let’s look at a few.

You Can’t Afford to Repair Flood Damages

Even if your area isn’t prone to floods, getting insurance that covers it may be a good idea if you don’t have the finances to pay for damage to your property.

Remember, flooding can cause massive damage that costs tens of thousands of dollars to repair. So, if you don’t want to worry about the unknown, flood insurance will put your mind at ease.

You Live in a Flood Zone

If you live in a flood zone, most mortgage companies require you to have flood insurance before approving your loan. But, if you have a government-backed mortgage, this may not be the case. So, if you live in a flood zone and don’t have flood insurance, you’ll want to get it right away.

Your Home Is at High Risk for Floods

Your house may not be in a flood zone, but you still may be at significant risk for a flood.

FEMA has a tool that helps you assess your flood risk. Using it can help you determine whether you should get a flood insurance policy.

Now, let’s look at your options for flood insurance!

National Flood Insurance Program (NFIP)

The most popular type of flood insurance is the NFIP. It’s federally supported, and anyone can get it no matter where they live in the United States. These policies cover dwellings and the contents inside them.

Of course, getting dwelling coverage is mandatory and protects the structure of your home. However, it also includes appliances that are built-in and attached structures up to $250,000.

If you wish to up your policy, you can also protect the contents of your home. This coverage includes furniture, clothing, household decor, and anything else in your home up to $100,000. Yet, you don’t have to purchase this policy if you don’t want to.

If you would like to buy government-backed flood insurance, you won’t be able to do so online. Instead, you should get a quote from a flood insurance agent. Many of them can write NFIP policies, so be sure to ask the agent if they have this ability.

Private Flood Insurance

If you don’t want to purchase an NFIP policy, you can contact a private flood insurance provider instead. The main difference is that an independent company or the insurance company backs these policies instead of the government. Often, private flood insurers rely on a reinsurer or the money collected from premiums to pay claims.

The benefit of private flood insurance is that it usually has higher policy limits and more coverage options. And sometimes they offer shorter waiting periods.

If you want to purchase a private flood insurance policy, you should visit different companies’ websites for quotes.

How Much Does Flood Insurance Cost?

The cost of flood insurance varies greatly depending on where you live (the state and whether you’re in a flood zone).

These factors will affect the cost of flood insurance:

  • Your home’s age
  • Construction materials
  • Number of floors
  • Whether there is a basement
  • Your home’s elevation
  • Distance from a body of water

In some cases, homeowners pay only a few hundred dollars. Yet, for high-risk homes in flood areas, it can cost over $10,000.

Types of Flood Insurance for All Homeowners

If you live in an area prone to flooding, having homeowner’s insurance isn’t enough to protect your home and possessions. Thankfully, after reading this post, you have a better understanding of the different types of flood insurance. Now, it’s time to research your options and get the best flood insurance out there!

If you would like more content for the smart homeowner, browse more content on our blog that can help you make informed decisions!

You May Also Read This Post: Home Makeover Ideas for Homeowners on a Budget