Flooding is the most common type of natural disaster in the United States.
In fact, over 90 percent of all natural disasters involve flooding of some sort.
Flooding can occur in any region of the United States as a result of flash floods, inland floods, and flooding from severe storms. Flooding can be unpredictable and can cause devastating damage.
A single flood insurance claim can cost as much as $54,000.
Fortunately, flood insurance can be purchased at an affordable price to protect your property from this unpreventable disaster.
Keep reading to learn more about flood insurance prices and why you should consider purchasing a policy.
What is Flood Insurance?
Flood insurance is a type of home and business insurance that covers losses to your property and its contents in the event of damage caused by a flood.
Certain areas are designated as high flood risk zones. If you own property in one of these zones, you are required to purchase flood insurance.
There are some exceptions to this if your home is located on a hill and higher than what is called the Base Flood Elevation. If you are purchasing a new property and aren’t sure if it is located in a high-risk zone, ask your realtor, mortgage lender, or insurance agent for more information.
The National Flood Insurance Program (NFIP) can also provide you information about the flood risk for your property. Check out this page to see if your property is located in a flood zone.
Flood insurance is generally administered by the federal government. You can purchase this type of insurance from an insurer who has a contract with the Federal Emergency Management Agency (FEMA).
Flood insurance is offered in communities where the local government follows required regulations for flood plain management.
Why You Need Flood Insurance
If you determine that you don’t live in a flood zone, don’t write off flood insurance just yet.
A significant amount of flood claims occur in areas that are not considered high flood risk. Flooding is unpredictable.
Fortunately, you can purchase a policy no matter where your property is located. If a loss does occur, the premium will be well worth the price.
You might be thinking you don’t need flood insurance because you already have homeowner’s, renter’s, or a business property insurance policy. None of these policies will cover losses caused by flooding. If you read your policy, you will find an endorsement that excludes damage caused by a flood.
This is so that you have the option of purchasing flood coverage if you choose to as an addition to your regular policy.
What Does Flood Insurance Cover?
Flood insurance will cover physical losses caused by a flood and losses caused by flood-related erosion.
The erosion has to be caused by waves or currents that exceed cyclical levels that were anticipated and caused by flooding such as a flash flood, an abnormal surge of the tide, or a severe storm.
You must purchase separate policies to cover the buildings and structures on your property and the contents inside them. This is important to note as you want to make sure you have adequate coverage for your belongings.
Your policy will cover the replacement costs of buildings, but only the actual cash value of your personal property. This means that depreciation is taken into account.
The coverage limits offered by the NFIP for homeowners are $250,000 for structures and buildings and $100,000 for building contents. For commercial properties, the limits are $500,000 for buildings and $500,000 for contents. It is possible to purchase excess coverage from a private insurer.
If you are wondering what happens if your car is damaged by flooding, your auto insurance policy will cover this if you have purchased optional comprehensive coverage.
Purchasing Flood Insurance
Flood insurance is easy to purchase from your insurance agent.
It’s important to purchase your policy in advance because there is a 30 day waiting period before coverage goes into effect.
Because the limits offered by the NFIP policies are not enough for many people, private insurance companies offer excess flood insurance policies that will take effect if the primary policy’s limits are exhausted. Check out these steps to purchase a commercial flood insurance policy.
Flood Insurance Prices
The cost of flood insurance depends on many variables. These include the amount of risk for the zone your property is located in, your deductible amount, the size of your home, and the location.
The average cost of a flood insurance policy, per FEMA, is around $700 per year. This is highly dependent on the factors listed above, however.
If you are looking to lower the cost of your flood insurance premium, you have a couple of options. The first option is to increase your deductible.
This means you will have to pay more out of pocket if a flood does occur, but you will pay less annually.
The other option is to increase the elevation of your home or business. You may be able to get loans or grants at a low cost to do this.
Better Safe Than Sorry
When it comes to flood insurance, flood insurance prices are well worth the protection and peace of mind.
You never know when a flood could strike and failing to have proper insurance in place could cost you a fortune. If a flood does strike and you aren’t insured, you’ll end up paying for the damage out of pocket.
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