What You Need to Know About Flood Insurance
According to a study published in the journal Environmental Research Letter, 41 million Americans live in a flood zone. In Florida, there are about 2.5 million homes in high-risk zones, three times the number of any other state, FEMA reports, yet less than half of those homes are covered with flood insurance.
With about 90% of all natural disasters involving flooding, that makes carrying this type of insurance a must, whether you own Jacksonville real estate or property anywhere else. In fact, 20% of all flood claims are filed in areas that are considered low to moderate risk, making it important for all homeowners. If you’re seeking out a mortgage loan for a home that’s inside a flood zone, furnishing proof that you’ve purchased flood insurance will be required before closing. Federal law requires that mortgage holders with property inside flood zones are covered with flood insurance to cover potential losses.
Here’s what else you need to know when purchasing it for the first time.
What Your Homeowners’ Insurance Covers Related to Water Damage
Flood insurance is a distinct policy from your homeowner’s policy. It’s priced differently and has different exclusions and rules. Your homeowners’ insurance will cover water damage that’s connected to a burst pipe, for example, but it won’t cover events related to precipitation like heavy rain, a natural disaster or rising river.
The premiums for flood insurance differ depending on the type of coverage as well as various factors about the home, including its style, age and location, which determines the risk of it being damaged during a severe weather event. If you’re not in a flood zone, it will cost less – if you are in a high-risk zone, you’ll pay more. The government sets the rates, so they don’t differ from agent to agent or company to company, but you may be able to get a better rate by working with one insurance company for various policies which often qualifies one for discounts.
The Coverage Options
The amount of coverage you purchase depends on your home’s value and its contents. A building policy will cover your roof, walls, floors, etc. By adding on a contents policy, it will also cover household valuables inside. Neither will cover the land your home is on, however. Physical damaged related directly to a flood, like damage to flooring and furnishings are typically covered. Indirect damage is sometimes covered if it was due to the result of a flood, like a mudslide or sinkhole.
It’s important to find out exactly what will be covered and what won’t be covered should a disaster occur before you buy.