Floods can be unpredictable, damaging and incredibly expensive. Investing in flood insurance is a smart way to protect your home or business from potential future floods. This guide will help you understand the different types of flood insurance available and decide which option is best for you.
Overview of Flood Insurance Types
Flood insurance can be divided into two types: standard flood insurance through the federal government and private flood insurance through an independent provider. Standard flood insurance provides policyholders with access to coverage from the National Flood Insurance Program (NFIP). Private flood insurance provides additional coverage options, such as higher limits and coverage for items not included in a standard policy and potential discounts. Both types of policies offer advantages and disadvantages to consider when deciding which is right for you.
How to Determine your Property’s Risk for Flooding
Before securing a flood insurance policy, it is important to understand your risk. You can review FEMA’s Flood Insurance Rate Maps (FIRMs) to determine whether properties in your area are at or below the base elevation–the recommended elevation to meet standard construction requirements for flooding protection. Suppose your property is not at or below the base elevation. In that case, there may be certain regulations that should be taken into consideration as they could affect the amount of coverage you require.
Get Flood Insurance
Insurance is a necessity in any day and age. We live in a very exciting time, and developments in technology allow us to shop for so many more options, coverage types, and companies than we could have imagined even a few years ago.
The most important thing to remember before you buy any type of insurance, including flood insurance, is: to find a trusted agent and work with them to get the best protection your needs at a cost you can afford. Getting flood insurance, for that fact, any insurance quote if you are looking at the numbers, you are only seeing half the picture.
It can be very confusing to wade through all the options and information, and frequently you can overlook simple ways to save money and protect yourself. You might be overwhelmed by full email inboxes, piles of mail, and the daily life of keeping on top of your work and household and shopping for finding a flood insurance quote is just too much.
Even more exciting and daunting is if you are in the middle of buying a new home or putting an offer on a new home, looking at all your homes within your price range, getting a loan putting in an offer, accepting the offer. You are working through all the steps to get your new home, inspection, counteroffers, closing, escrow money you have to bring to the table, and we haven’t even talked about packing, moving day, insurances, etc., taxes. Wow, I’m overwhelmed writing this.
Finding the right flood insurance is important, and shopping for all your options is equally important. The best thing about you reading this is you are in the right spot with a flood nerd at every online form submission. If you give us the honor of shopping for your flood insurance, you can take one of your daunting tasks out of your day today.
“Get the coverage you need and a price you can afford by working with a Flood Nerd™ to shop your flood insurance quotes”
Getting Flood Insurance Quotes
For most people, their home is the most expensive thing they own, and it contains all their prized positions, let alone their family memories. If your home is damaged or destroyed by a flood and you didn’t have enough or no insurance, you are left out of the comfort of your shelter; you also lost money you paid into your home (equity) and possibly your things. May type of damage happens every day, and if your home is in a high-risk flood zone or any flood zone for that matter, you have a 20% chance any given year over the life of your mortgage to experience flooding even.
You had to borrow money from a bank to buy your home. If your home is in a high-risk flood zone, your lender will insist you insure your home against flooding. That’s where Flood nerds come in.
You need a flood insurance agent that knows what coverage fits your needs you need a flood nerd™
Flood Nerds specialize in flood insurance for homeowners and their families, and we have been doing it for many years. We can explain the basics of flood insurance so you have a better understanding and that you will be better prepared, protected, and informed.
Below you will find some rules for saving money and getting great flood coverage.
A typical home insurance policy doesn’t cover flooding.
The only way to get flood insurance is with a stand-alone flood insurance policy. And there are two types out there: the government option that has had a 50-year monopoly on flood insurance and the growing private flood insurance market that includes Lloyds of London Flood Insurance.
Like a homeowners policy, flood insurance has two parts structure coverage and contents coverage. Structure coverage is the building itself (aka your home) which is the house structure and the garage (if attached); you can use 10% of our home coverage to cover a detached garage if that is what you have. The contents coverage is your possessions inside the house, such as furniture, appliance, and clothes.
Some private policies have coverage labeled as appurtenant or other structures, and this will cover detached garages if you don’t want to reduce your home coverage.
Many private flood policies now have living expenses that can be used if needed to cover your cost in the unfortunate event you are displaced due to flooding in your home.
Dwelling flood Coverage pays to rebuild or repair your home.
Make sure you have enough flood insurance to cover the cost of rebuilding your home at the current construction cost. To find the coverage you need, take the total square footage of the house and multiply it by the current local rebuilding costs per square foot. For example, a 2000 square flood home with the local rebuilding cost of $150 per square foot (2000 x 150) comes to $300,000 of dwelling coverage.
Other Structures Cover garage buildings that are detached from your home itself.
If you have a detached garage, you can increase this coverage or use 10% of their dwelling coverage to cover a garage. Note if the detached garage has a livable area above or attached to it or if the detached structure is used for anything other then solely parking your cars, it will need to have its flood insurance policy.
Personal property and content cover household contents
This coverage covers your furniture, clothes, appliances, etc. It is recommended that you have 50% to 80% of your dwelling coverage. If you insure your house at $100,000, your contents should be at $50,000 or $80,000.
Contents coverage is optional on a flood insurance policy and is not automatically added of a flood so you will need to ask your flood nerd to add in contents if you desire it. Your homeowner’s policy will not cover anything due to flooding. Content coverage typically pays only the actual cash value of your damaged or destroyed household goods.
Only some private flood insurance policies offer Loss of Use, sometimes called additional living expenses.
This coverage will reimburse you for any additional cost of living somewhere else while your home is being restored after a disaster.
One of the more confusing things about buying flood insurance is the different types of policies and how they will payout and this is a good time to speak about “replacement cost” and “actual cash value”
The actual cost value is also called depreciation which is the item’s replacement cost, minus depreciation (how much the value of the item goes down over time.
Replacement Cost coverage gives you much more protection than actual cash value, and the different policies payout differently. I will cover some of the common policies, but you will have to review your declaration page and or ask your flood nerd to go over the coverages with you once you purchase the policy.
How to get Replacement cost on the NFIP policy
The only NFIP policy that will pay the replacement cost for the structure is ONLY on a primary residence that is insured at 100% of replacement cost or the maxim of $250,000
Replacement cost on the private flood insurance market
Some private flood policies payout on replacement cost again you will need to review the language parameters, but usually, they follow the NFIP, but some do pay replacement cost on a second home
It is common knowledge that it is on the insurance-buying public to understand what their policy jacket says. We are more than willing to assist you with any specific questions, and if you got a quote from us and want to read the policy language before purchase, just ask we will be happy to send it over.
If you live in an area prone to flooding, you may be required to buy a flood insurance policy. And we have found that the average flood insurance policy in flood zone AE is between $500 – $1500, depending on foundation and flood risk. If you are not in an area that requires flood insurance, you should still consider it since statistics show that 20% of all claims every year come from an area that is not required to purchase flood insurance.
