Are You Flooded?

Are You Flooded?

Often when you are buying a new home the lender may require flood insurance. This is especially true if you live in an area inclined to flooding, or if your home is on a flood plain. Federally mandated by law, flood insurance protects you in the event of a flood caused by natural disasters. It is important to understand this is different than the insurance that is part of your normal homeowner’s plan, which covers flooding caused by your plumbing.

If your home is in an area legally classified as high-risk, flood insurance must be purchased. Landlords in flood inclined areas are also required to have flood insurance for similarities inside the designated zone. Homeowner’s may opt to drop this coverage after their loan has been repaid in complete, although it is always safer to continue the policy whenever possible.

Generally there is a thirty-day waiting period before claims can be made. The only exception to this rule is when the lender requires the insurance as a stipulation of the loan. Because of this waiting period it is always advisable to start your policy before the onset of hurricane or flood season in your area.

Flood insurance typically covers not only water damage from floods, but also protects you from flood related disasters such as mudslides, sewer backup and fires. The price of your policy will be dependent upon several factors, including the year of building construction, the occupancy, number of floors, the risk factor for your location and the deducible you choose. There are several website obtainable online that will help you calculate your risk factor at no charge.

When shopping for flood insurance, it is important to shop around and compare policy elements in addition as price. As with any kind of insurance, prices will vary considerably from one company to the next. Often you can get discounts by combining insurance policies with your current auto or homeowner’s insurance provider. Selecting a higher deducible will also cut your out of pocket expense initially, but it is important to be certain you are setting a deductible you can reasonably provide in the event disaster strikes.

Many people who own their homes without a mortgage payment think that they do not need to continue their flood insurance, especially if they are in a low-risk area. Contrary to popular belief, low risk areas flood quite regularly. It is estimated that 25% of flood insurance claims come from homes in low-risk areas, so do not be fooled into making this mistake.

Most importantly, do not let your policy lapse. All flood insurance policies expire at 12:01 a.m. on the last day of their term, however you will be covered for thirty days after the expiration of the policy. Should you have a claim during that thirty-day period, you will be covered as long as the new policy is paid in complete before the grace period expires. It is best to not take chances and keep track of your policy’s expiration date to be safe.

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