Wednesday, May 18, 2011

The Importance of Flood Insurance

It may seem like it's unneccessary. Your area never floods, you aren't near water, etc., etc. But the reality is, you need flood insurance (renters and owners included). Why?
  • Most insurance policies do not cover any form of flood, which is often defined as rising water entering the home from the outside. What you might not realize is this includes man made causes as well. So say a water main breaks in the street and floods your basement. Your home insurance is not going to pay.
  • Floods can becaused by droughts. That sounds silly, but the longer an area sits without rain the harder and harder the ground gets, so when it does rain the water does not drain immediately. So what was much needed rain becomes an inch of water in your living room.
  • Storm surge. Your policy may cover hurricanes, but it most likely does not cover the storm surge.
  • Sometimes rivers flood, which causes smaller rivers and streams to flood. Just because the small stream that runs right behind your house has never flooded, doesn't mean it couldn't some day.
  • Ice melts. If you live near mountains or in areas where it snows a lot. Melting snow and ice have been known to cause problems.
  • Do you own a pool? It's a very real possibility that if it rains for days and days that it could end up a big problem for you.
Ok so I've given you a bunch of reasons why you need it, now let's talk about how to get it.
  • The only provider of flood insurance is the national flood insurance program, however most insurances companies can do the applications for you.
  • Depending on your risk class, you will either be preferred or in a risk category. The rates differ for the two.
  • In most cases it covers structure and belongings.
  • If you purchase for closing, there is no waiting period, if you wait there is a 30 day waiting period. (This is similar to how you can't get a homeowner's or renter's policy when their is a named storm in the ocean, that is if you live in an area that deals with hurricanes).
  • Since the program requires renewal from Congress, there are periods that if Congress is fighting over something else, no policies can be written. All the more reason not to delay in getting it.
So really it's a smart idea to get it. And if you live by any body of water, it should be a necessity (some lender's require it). Dealing with a flood is hard enough, but it's far worse when you find out your insurance pays for nothing.
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