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Health & Fitness

Should you get flood insurance?

The basic facts about flood insurance for your home.

The devastation to a large portion of the country by Hurricane Sandy has caused a lot of folks to examine their homeowner’s insurance policies. Many are shocked to discover that their policies do not cover any damage from flooding.

 

Most homeowner’s policies cover damage from fire, wind, trees, hail, etc. They also generally cover water damage resulting from any of those things, including roof replacement if necessary. However, as a general rule of thumb, if the water comes from the ground or hits the ground before entering your home, it’s not a covered incident. For instance, if your street floods, and the water rises high enough to enter your home, even the basement, this is not generally covered by a homeowner’s policy.

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As you can see from the media coverage of the damage caused by the hurricane, the losses can be devastating. People used to think if they weren’t in a designated flood plain, or in a hurricane-prone area, their risk level was relatively low. But, due to several factors, including climate change, and changes in water runoff due to massive development over the years, you may not be as safe as you think.

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So, what can you do to protect yourself from such incidents? I would strongly recommend looking into a flood insurance policy to see if it makes sense for you. My partner and I did it last year, and it’s given me great peace of mind.

 

You can purchase a policy from your local insurance agent, and it is administered by insurance companies, but paid for by the Federal Emergency Management Agency.

The average price tag for the flood program is about $585 per property annually, although the cost can be much higher in riskier areas. Ours was less than the average. Lenders mandate the coverage for properties in areas that are deemed at high risk of flooding, but the policies are available nationwide, whether or not you are in a flood-prone area.

 

Once you apply for the policy, as we did through the State Farm agent who holds our homeowner’s policy, they will order a flood certification study, which will determine your risk factor, and thus your rates. My experience has been that unless you are currently listed as being in a flood plain, you will be able to get a decent rate.

 

The federal flood-insurance program provides coverage up to $250,000 for the structure of the home and $100,000 for personal possessions. Unlike homeowners' policies, flood policies do not pay temporary relocation costs, such as hotels or apartments. They also do not pay for damage in a basement, other than to the heating, air conditioning and water systems.

 

Another difference is that flood policies pay for the cash value of damaged goods, rather than their replacement costs. Still, that’s a whole lot better than nothing, which is what you would get otherwise in a flooding situation.

 

My advice on this is to look into it now, and get all the facts so you can make an educated decision in the right time frame. The policies do have a 30-day waiting period. One of the main reasons to consider this now is that FEMA will be re-assessing and re-drawing many of the flood maps over the next few years, which could make it harder to obtain a policy if your property is affected by the changes.

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