6 Myths About Flood Insurance
Whether or not insurance will cover flood damage depends on how much water damage there is, your home’s value, and if you have a policy with flood insurance. Standard home insurance policies don’t include flood coverage, so you will need an additional policy that is offered by the National Flood Insurance Program. These policies have a coverage limit of $350,000 for your home and personal belongings, so you might need to supplement different coverage if you aren’t comfortable with that limit.
While most people will associate a flood claim with disaster and total loss, the Flood Insurance Programs says that average flood claim is less than $40,000 for homeowners in the U.S.
So, what are some other myths about flood insurance?
“You have to live in a flood zone to get a flood insurance policy.”
This isn’t true. If your home is in a flood zone, flood insurance will probably be required by your lender. However, you can still purchase flood insurance if you are outside of a flood zone. In fact, it is relatively common. Flood insurance prices average at about $660 each year.
“You only need flood insurance if you live in a high-risk area.”
Just because you don’t live in a flood zone doesn’t mean that flooding will never happen to your home. There are plenty of scenarios where homeowners didn’t have flood insurance because they weren’t in a high-risk area, and flooding completely destroyed their home.
Even if you don’t live in a flood zone, you should consider any potential dangers and consider a flood insurance policy.
“Everything is covered with flood insurance.”
That depends. There is a limit with federal flood insurance policies of $250,000 for the structure of your home. So if your home is valued at $300,000 and it becomes a total loss due to a flood, you can only get $250,000 for the home’s structure. The cap for personal possessions is $100,000. If you already have a policy through the federal flood insurance program, you can also get another flood policy from a private carrier which has coverage for claims above the limits on the federal policies. Flood insurance does not cover any relocation costs while your home is in the repair process.
“Your homeowners policy includes flood coverage.”
A standard homeowners policy does not cover floods, despite the assumptions of many homeowners. Earthquakes aren’t covered by standard policies either, so homeowners who want one or both of those disasters covered will need to investigate separate policies. Flood policy coverage only starts 30 days after you have bought the coverage, so buying the coverage right before a hurricane hits would be too late.
“All water damage is flood damage.”
This isn’t quite true. Not all water damage is viewed the same, and there is a difference between storm damage and flood damaged. If your roof is damaged in a storm and water leaks through, that would fall under the coverage provided by your homeowners insurance policy. However, if the riverbank near your home overflows from a lot of rain and affects your home, that would be considered a flood situation.
“Flood maps don’t change.”
Flood zones actually change, so even if your home wasn’t in a flood zone when you first made the purchase, it could be now.