According to FEMA, floods are the number one natural disaster in the United States every year. Living in Louisiana, this comes as no surprise. Many people believe that flood insurance is unavailable or too expensive to carry, but that is just one of many misconceptions.
It is also important to understand what is and what is not covered by these policies and who may need one. Read on to get answers to these questions and more.
Why Should I Buy Flood Insurance for My Home?
The obvious reason is to protect your home and belongings in the event of a flood. Although FEMA may assist with losses, what most people don’t know is that federal disaster assistance is usually a loan that must be paid back with interest. For a $50,000 loan at 4% interest, your monthly payment would be around $240 a month ($2,880 a year) for 30 years.
Compare that to a $100,000 flood insurance premium, which is about $400 a year ($33 a month). As you can see, it is much cheaper to invest in flood insurance for 30 years and only need it once than to take out a loan to cover your expenses during that flood.
When deciding to invest in any insurance policy, you must weigh the possibility of needing the coverage with its cost. In this case, it makes sense to buy the policy if you have a moderate or significant risk of flooding, live in a flood plain, or have other risks such as living in a coastal area.
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Doesn’t My Homeowner’s Insurance Policy Include Protections Against Flooding?
No, your homeowner’s policy does not protect against floods. This is a common misunderstanding and most homeowners do not discover this until it is too late. While many homeowners’ policies will pay for water damage under some circumstances, flooding is generally not one of them.
For example, if you live in a coastal area and a hurricane storm surge floods your home, only flood insurance will cover the costs. However, if a large tree falls, creates a hole in your roof, and the rain causes water damage, your homeowner’s insurance may pay.
Can I Get Flood Insurance If I Am Renting a Home?
Yes, if you live in a community that participates in the NFIP (National Flood Insurance Program), flood insurance coverage is available for renters. This can cover up to $100,000 of possessions in your home at the time of a flood. Because it does not cover repairs to the structure itself, these are among the lowest premiums available for flood insurance, according to FEMA.
If you live in a low-to-moderate risk area, you could qualify for a Preferred Risk Policy to save you even more money.
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How Much does Flood Insurance Cost?
If you live in a moderate-to-low-risk area, your flood insurance premium may be as low as $129 a year, including coverage for your property’s contents. Policies up to $250,000 may be as inexpensive as $350/year. Monthly payments could be as low as $25.00 but can save you hundreds of thousands in the event of a flood.
Of course, the price of coverage changes over time. There are also many other factors that could play a role in how much your policy costs annually. This includes your location and flood risk, the deductible you choose, and the coverage amount.
To learn more about how much your flood insurance could cost and other crucial information, you should check out the FloodSmart website, run jointly by FEMA and the NFIP.
What does Flood Insurance Cover?
You can choose from two types of policies when you purchase flood insurance, and this will determine what is covered. One covers the home itself, and the other will cover both the home and its contents. Insuring the home plus the contents costs slightly more annually but is a wise option if you are concerned about replacing your valuables, furniture, electronics, clothes, etc.
Of course, renters’ policies only cover the contents of the rented home. The property owner will need to invest in a separate policy to pay for repairs to the home following a flood.
You should consider the replacement value of your belongings before deciding whether you need to insure them. If you only own a television, couch, bed, and a few other items it may not be worth paying several hundred dollars a year to you. However, you may want to take an inventory (with pictures or video) of your belongings so that you can get a better understanding of what you have and its value. This can also help you prove your claim if you need to file one.
How do I Buy a Flood Insurance Policy?
Here are a few helpful websites:
Hurricane season is just around the corner, so if you are interested in buying flood insurance, now is the time to get serious and start contacting insurance agents in your area.
Getting Help With a Flood Insurance Claim
If you do suffer flood damage and have coverage, you may need help filing a claim and recovering compensation. If you have questions or concerns about your New Orleans flood damage and insurance claim, the Morris Bart law firm can help. We provide free consultations.
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