Whether you’re aware of it or not, flooding does happen in all 50 states. Some cases are more extreme than others, but it still pays to be aware of the flood plains in your area before you buy. Depending on where your new home falls on the map, your lender may require you to buy flood insurance in addition to your homeowner’s insurance.
Before you jump right into your new insurance, here’s a quick primer on some of the basics.
What kind of policy do you want and what do you want it to cover?
In general, most flood insurance policies have 3 main portions or components. As a homeowner, you need to decide how much money you want to put towards coverage for the building itself, the contents of your home, and all the replacement costs for everything.
What exactly is covered?
While list of specifics covered is very broad, flood insurance policies generally insure the physical damage done to your home as well as your personal belongings inside the home. This list includes but is not limited to, the building itself, electrical and plumbing systems, household appliances, furniture, valuable items, clothing and more.
What is NOT covered?
Even though flood insurance policies want to help you out as a homeowner and cover you as best as they can, there are certain specifications that are not covered by the insurance. This would include any damage done outside of your home (fences, shrubbery, patios, swimming pools etc.) In addition to this, vehicles parked outside of your house would also not be covered.
What is your risk?
Do you live in a moderate-to low-risk area? Even if your lender doesn’t require it, you may want to get flood insurance. According to Bankrate, around 1 in 4 flood claims is for a property that doesn’t sit in a flood plain.
Most people in moderate-to low-risk areas are likely qualified for preferred rate coverage. Meanwhile the high risk area homeowners are only offered a standard rated policy. Talk to your agent to determine which flood insurance policy will provide you with optimal coverage.
Flood insurance rates
As mentioned above, for homeowners living in a high risk flooding area, flood insurance will most likely be required. The rates involved in the different types of coverage mainly only depend on the quality of your home, the form of architecture, and of course, your area’s flood risk level. Depending on your community, it is a good idea to see if they offer a flood insurance discount. Especially if you’re in those high risk areas! Rates can vary significantly, but as a homeowner, it is best to be safe than sorry.
While flood insurance does have its limitations, it is just like any other policy. As a homeowner it is best to have it in case of an emergency. Make sure to talk to your agent to find out what plan is best for your home. There are plenty of preferred risk policies and community discounts offered. So do yourself a favor and cover yourself before it’s too late!