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Is Your Homeowner's Insurance Giving You Protection from Flood Damage or losses?

Aug 17, 2007
The first thing that surprises many people about flood insurance is that everybody is actually considered to live in a flood zone according to FEMA (Federal Emergency Management Agency) - its simply a question of whether you are at low, moderate or high risk of flooding. Obviously some people, depending on where they live, are at greater risk than others.

And another surprise is that even people who live in areas not particularly prone to floods may be at risk from flooding - around 30% of claims for flood damage come from areas that are considered low to moderate risk. And during a 30 year mortgage, a typical home has about a 25% chance of being damaged by a flood.

Many homeowners are also surprised to learn that flood insurance is not included under their regular homeowner's insurance policy or renter's policy. And a surprising statistic is that in general, you are 30 times more likely to lose your home to a flood than a fire. Every year around $2.4 billion is paid out in insurance claims for flood damage or losses.

A flood can mean any kind of water damage or damage from mud, poor drainage or seepage. Much flooding is caused by winter storms, melting snow and hurricanes - things which many people tend to overlook. Just an inch of water can potentially cause costly property damage and a car can be swept away in just two feet of water.

Because most policies don't cover flood damage, Congress established the National Flood Insurance Program (NFIP) in 1968. This program allows people who may be at risk from flooding to purchase adequate insurance - even after the flood or water damage has occurred.

Several companies offer flood insurance - always make sure the company you choose is backed by the NFIP. This ensures you will be adequately protected in the case of flood damage. This is one type of insurance you shouldn't take out at the last minute - one disadvantage with the program is that after you have taken out flood insurance, there is a 30 day waiting period before any coverage takes effect.

As with other products and services, always shop around when comparing policies. The internet has made it just as easy to compare prices on line as it is to call around the various companies. Around 5 million people in the United States have some form of flood insurance and the average monthly premium is around $350 per year.

Take into account the amount of coverage you will receive in the event of a flood, as well as the amount of the monthly premiums. Make sure that there are no exclusions to the policy that may affect you. And make sure your insurance company can easily be contacted if and when you need them.

Most flood insurance policies will cover the costs of replacing or repairing both property and goods in the event of any damage. Contents can include furniture, clothes, rugs and carpets and other possessions - even the food in your freezer.

Contents and buildings both generally have separate deductibles (the amount you must pay before the insurance covers the costs) - so if both your property and contents are damaged by flooding, you will have to pay both deductibles.

So even though you may not obviously live in a high risk flood area, consider taking out flood insurance. Like most insurance, you hope to never use it - but it's comforting to know it is there.
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