Flood insurance protects homes from water damage due to flooding. Without supplemental insurance, damages from floods are typically not covered, as they are considered unforeseeable events. Learn what you need to know about flood insurance.
How Does Flood Insurance Work?
Flood insurance is distinct from basic homeowners insurance. It covers damages due to floods, which standard insurance does not.
The insured pays an annual premium based on flood risk and chosen deductible. If external events like rain, storms, or infrastructure failures lead to flooding and damage, the homeowner is compensated for repairs or rebuilding up to the policy limit.
Unlike homeowners insurance, flood insurance requires separate policies for the dwelling and its contents. Additional coverage is necessary for sewer backup unrelated to rising floodwaters.
Who Needs Flood Insurance?
Consider your home’s location to determine if flood insurance is necessary for your living situation. Coastal regions and flood-prone areas should consider opting for separate flood insurance coverage. Some mortgage and federally regulated lenders may require flood insurance, especially for those living in high-risk flood areas or receiving federal disaster assistance.
Even if you don’t live in a flood zone or your lender doesn’t demand it, purchasing flood insurance is recommended, particularly for those in moderate to low-risk flood areas. FEMA’s Flood Map Service Center can provide information on your home’s flood risk. Coastal communities and low-lying areas near bodies of water should seriously consider flood insurance regardless of FEMA’s maps.
Consider the cost of flood insurance premiums, which depend on factors like your home’s flood risk designation, construction year, elevation, and structure. High-risk flood areas have higher rates, and older homes may be more costly to repair and protect against flooding.
Also, take into account climate change predictions. Climate change has intensified rainfall and flooding. Also, recognize that each state in the U.S. has a different level of preparedness for climate change. Vulnerable states may be ill-equipped to handle current and future risks.
What Does Flood Insurance Cover?
In general, flood insurance covers the physical structure of your home, including its foundation, plumbing, electrical systems, and central air and heating systems. In addition to the building, flood insurance can cover your personal belongings.
However, flood insurance does not usually cover damage from moisture, mold, or mildew. Coverage for below-ground rooms and their contents is often limited, with some items included under building coverage and others under personal contents coverage.
What Factors Determine Flood Insurance Rates?
Private flood insurance companies determine flood risk rates based on several factors. Two significant factors are elevation and distance to water. Elevation is measured in relation to potential flood levels, and it has long been utilized by the National Flood Insurance Program (NFIP) using Elevation Certificates and FEMA flood zones.
Replacement cost estimates and coverage amounts also play a crucial role in determining rates and eligibility. Customers pay lower premiums per thousand dollars of coverage as they approach the replacement cost of the property. Insuring more of the structure also helps meet the requirement for replacement cost loss settlement on primary structures.
The type of property and claims history are additional factors affecting rates. Rates may vary depending on whether a single-family home is a primary or secondary property. Primary dwellings often receive more attention and prompt response from owners, leading to faster mitigation of losses and limiting payouts. Moreover, claims history can impact eligibility, as some carriers may refuse properties with previous flood claims or those with claims within a certain period, such as the past five years.
Family Insurance Centers has served Polk County and surrounding central Florida areas for over 30 years. As an independent insurance agency, we prioritize superior service, excellent products, and the best available rates. Contact us to know how we can help you.