Homeowners in high-risk areas should purchase flood insurance as an essential step towards becoming homeowners, with lenders often mandating that these individuals obtain coverage through the National Flood Insurance Program (NFIP) before being approved for federally regulated loans.
NerdWallet walks you through both types of policies offered by NFIP: building and contents coverage. Our guide helps inform informed decisions when choosing this form of insurance coverage.
Homeowners Insurance
If you live in an area prone to flooding, it’s wise to invest in flood insurance. This policy stands apart from a standard homeowner policy by covering damages caused by floodwater directly. There is both National Flood Insurance Program coverage as well as private insurer policies available – compare their rates carefully in order to find the most cost-effective plan.
Many people don’t realize that standard homeowners insurance doesn’t cover flood damage. To safeguard yourself and your possessions from this threat, the only effective solution is purchasing flood coverage – available both to homeowners and renters alike, plus non-residential properties like condos, apartments and commercial buildings.
The Federal Emergency Management Agency strongly suggests obtaining flood coverage if you live in an at-risk area or own property in designated flood zones, particularly if mortgage lender requirements include such coverage as part of their terms for issuing mortgage loans in such zones.
Standard National Flood Insurance Policy (NFIP) policies cover up to $250,000 of building structure coverage and $100,000 of personal property damage. If this coverage amount isn’t enough to rebuild or replace all your possessions, excess flood insurance might be available through private providers like Neptune Flood or Chubb.
Shopping for flood insurance policies can be done directly with the National Flood Insurance Program or visiting its website, or using an independent agent locally who will get quotes for you from multiple providers – this may provide more personalized service or be an option if you are looking for specific types of policies.
You can typically receive a quote from the National Flood Insurance Program online, though there may be an extended wait. Furthermore, they may place a moratorium on new policies prior to major storms so they have enough funds in reserve to pay claims afterward – so it is advisable to get covered as quickly as possible.
Renters Insurance
Renters typically need to secure separate flood coverage from their standard home insurance policy; renters who live in high-risk areas may qualify for reduced premiums by participating in the National Flood Insurance Program or purchasing private policies from private insurers. Residents in communities participating with NFIP could possibly qualify for lower premiums than their counterparts who do not.
First, determine the value of your belongings and decide on an adequate coverage amount – typically companies suggest between $15,000-$40,000 in property insurance; you can opt to increase these limits as necessary. Furthermore, decide if you wish to include loss of use coverage as well as personal liability protection; this latter coverage protects you if someone becomes injured on your property which was caused by you.
When looking for renters policies, compare quotes from several providers. Carefully examine each provider’s coverage limits, premium costs, customer service offerings, reviews on third-party review sites like ConsumerAffairs or Trustpilot as well as any discounts such as student or senior citizen rates as well as add-on features and perks they might provide.
If you have a set budget in mind, consulting an independent insurance agent could be beneficial in finding the appropriate policy at an economical rate. Such agents work with multiple companies and can offer quotes from various insurers so that you receive quotes at various price points to find exactly the policy that meets your needs and fits within it.
As part of your renters policy purchase, be sure to read over its terms and conditions carefully in order to understand what coverage you have and any restrictions or fees that might come your way down the line. It would also be prudent to ask your landlord or leasing office whether any additional flood protection exists that might help protect against unexpected costs down the road.
Even though flood insurance is not required in New York, it is highly advised. A policy will reimburse you for the actual cash value of your items that takes depreciation into account. Ideally, purchase one as soon as possible as most policies require at least a 30-day waiting period before coverage begins.
Auto Insurance
As flooding continues to make headlines, now may be an opportune time to consider investing in flood insurance. Not included as standard coverage in homeowners or renters policies, flood policies provide coverage that only protects from rising waters that result from burst pipes or appliances, unlike some forms of home coverage that cover water damage from burst pipes and appliances.
Flood policies are available from both the National Flood Insurance Program (NFIP) and private insurers, though more recently private carriers have entered the market, making it easier to shop around and find competitive rates. A licensed agent can assist in determining your eligibility and identifying the ideal rate that meets your situation.
NFIP requires applicants from communities that participate in its program; however, private insurers may be more selective. To determine whether your community participates, reach out to local authorities. You may also use websites like Risk Factor that show flood risks at specific addresses as well as tips for mitigating those risks.
Your lender may require you to obtain flood insurance if your property is located in an area prone to flooding and has an existing mortgage backed by the federal government. In moderate or low risk zones, however, the cost is typically reasonable and can help safeguard valuable assets such as cars.
Your property and contents coverage requirements depend on both their value and structure, with standard National Fire Insurance Program policies offering up to $250,000 of building damage and $100,000 of contents coverage respectively. Additional or reduced deductible options can help lower premium costs further.
Selecting an insurance policy can be daunting, but it’s vitally important that all risks are carefully considered before making a selection. With Bankrate’s assistance in understanding all your options and finding competitive rates to ensure you have adequate protection, Bankrate experts are on hand to guide your search for just the right coverage at an affordable rate.
Commercial Insurance
Flood damage is the most prevalent natural disaster, and is also one of the costliest. Just an inch of water inside your home could cost upwards of $25,000. That is why flood insurance coverage is such an essential service – to cover repair costs associated with protecting both your home and personal assets should a flood occur.
Flood insurance policies were traditionally offered through the National Flood Insurance Program (NFIP), though today there are also private insurers offering flood policies, with surplus lines insurers (those operating outside of standard market practices and often offering lower premiums than their standard counterparts) sometimes offering policies with additional coverage such as debris removal and sewer backup protection not offered through NFIP policies.
There are no age or residency restrictions when it comes to purchasing flood policies, and no requirement to reside in a high-risk area to buy one. Though it isn’t required, having one could be required when taking out mortgage from federally insured lender; disaster assistance loans from Small Business Administration; and disaster loans through disaster loan assistance program of United Nations Development Programme. Even if it isn’t required, purchasing such coverage should still be considered; floods can strike at any time without warning and most homeowner policies don’t cover flooding damages caused by them.
NFIP provides both building/structure and contents insurance, with the former covering your home or place of business, while contents covers your personal possessions. Your location, construction year and building’s rating category from FEMA’s flood zones will determine your rates; additionally your deductible amount and whether or not you have a preferred risk policy also play a part.
If you want to decrease your premiums, there are various methods you can employ, including raising your deductible. Just remember that your deductible applies both for building/structure coverage as well as personal property coverage.
Buying a flood policy should be done well before an event of flooding takes place, typically there is a 30-day waiting period before your policy goes into effect. Furthermore, it would be wise to prepare for flooding by having supplies such as bottled water, first aid kits, flashlights, battery-powered radios, nonperishable food items blankets and cash ready.