We’re well into hurricane season, and every year we see images on the news of the devastation that flooding can bring. Whether or not you live in a hurricane zone, floods can happen anywhere and are ranked as America’s most common natural disaster. Because of this, you may be wondering how flood insurance works and if you need it. Here’s what you should know.
When you buy a home, it’s a given that you’ll purchase homeowners insurance. But it’s very important to remember that most homeowners insurance policies do not cover damage caused by flooding. For this reason, you’ll need to purchase a separate policy that covers floods.
As stated above, your mortgage lender may require you to have flood insurance if you live in a high-risk zone. In some cases, your lender may also require flood insurance, even if you don’t live in a high-risk area. The National Flood Insurance Program (NFIP) offers this type of coverage and can be purchased through a private insurance agent. The Federal Emergency Management Agency (FEMA) manages NFIP. You can find out if you live in a high-risk zone by viewing FEMA’s flood maps. Flood insurance covers up to $250,000 for your home and $100,000 for your possessions. If you need additional coverage or live in an area where NFIP is not available, you can purchase private insurance.
If you are in high-risk area or are required to purchase flood insurance by your lender, you should be aware of the cost and requirements. Be advised that flood insurance coverage does not take effect until 30 days after purchase. Don’t wait until a storm is in the forecast to talk to an insurance agent. The cost of an insurance flood policy is generally affordable. The average policy is only about $411 a year, which works out to just over a dollar a day. If you’re in a low-risk zone, your policy could cost even less.
The bottom line is that if you’re concerned about flooding, you should look into your options for flood insurance. It’s always better to be safe than sorry.
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