How is flood insurance purchased?
Repairing or replacing your home and belongings after a flood damages them can be quite expensive.
While homeowners and renters insurance typically doesn’t cover flood damage, a separate flood insurance policy helps protect your home and what’s in it.
Here’s what you need to know about purchasing flood insurance. Here are some things to consider about flood insurance:
WHO OFFERS FLOOD INSURANCE?
It can be purchased through an insurance agent or insurer that participates in the National Flood Insurance Program. (NFIP).
According to the Insurance Information Institute * (III), the NFIP began in 1968 and is administered by the Federal Emergency Management Agency (FEMA).
In addition to providing insurance, the NFIP also helps with floodplain management and flood zone mapping, says the III.
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Some private insurance companies also offer flood insurance.
HOW CAN I PURCHASE A POLICY?
According to FloodSmart.gov, NFIP policies can be purchased through many insurance agents across the country.
The same agent that helps you with a homeowners, auto, or renters policy can help you get the insurance if your community participates in the NFIP.
So talk to your local Allstate agent about how you can help protect your home and assets with it.
WHO CAN GET THE INSURANCE?
Homeowners, renters, and business owners can purchase the insurance.
If you live in a high-risk flood area and have a mortgage with a federally regulated or insured lender, FEMA says you must have flood insurance.
However, even if you live in a moderate- or low-risk area, your lender may require you to carry flood insurance , and it’s a good idea to purchase the insurance even if your lender doesn’t require it.
HOW DO I PAY FOR A POLICY?
If you’re paying for flood insurance for the first time, FloodSmart.gov suggests making your payment through your insurance agent.
Payment must be made before the agent can submit the application to FEMA.
Homeowners can also pay for the insurance coverage through an escrow account , which is a separate account with your mortgage lender that is used to pay bills related to your property.
Most lenders will require you to have homeowners insurance, which generally does not cover flood damage, but your lender may also require you to have flood insurance.
HOW DO I RENEW MY POLICY?
When your policy is ready to renew, you’ll get a notification from the agent or insurer that sold you the policy, says FloodSmart.gov.
Your renewal offer will include information on how to make the payment, which may be through your agent, the mail, or a service agent. If your coverage expires, there is a 30-day wait for reinstatement.
If you have an escrow account, the lender may pay your the insurance premium through that account, but it’s a good idea to confirm this with your mortgage company.
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IS THERE ANYTHING ELSE I SHOULD KNOW ABOUT IT?
Once you purchase flood insurance, there is typically a 30-day waiting period from the date of purchase until the policy goes into effect.
Your agent can help you determine what your effective date is, as well as whether you qualify for one of the waiting period waivers.
Also keep in mind that you’ll be responsible for the deductible , which is the amount you pay out of pocket before insurance pays for a covered loss.
According to FEMA, this amount will vary from policy to policy. There are also limits to the insurance policies, which is the maximum amount the insurer will pay for a claim.
Floods can cause a lot of damage to your home and your belongings. Knowing how to get the insurance is the first step in protecting yourself financially against potential flood damage.
Do I need flood insurance?
You’ve probably heard about it and wondered if you really need it. To help you decide if flood insurance is right for you, it’s important to understand a little about floods and insurance.
Floods are the leading natural disaster in the United States, according to the Federal Emergency Management Agency (FEMA).
Even a few inches of water can cause costly damage to your home and its contents, says FEMA.
Many conditions can cause flooding : spring thaw, heavy rain, hurricanes, and the rapid accumulation of rain after a wildfire are just a few.
And while certain areas are prone to flooding, it can happen anywhere and at any time.
Here are some things to consider when deciding if you should purchase a flood insurance policy.
NORMALLY HOMEOWNERS INSURANCE DOES NOT COVER FLOODING
It’s important to know that a standard homeowners insurance policy typically does not cover flood damage.
And since floods can happen anywhere, you should consider purchasing a separate flood insurance policy.
It is issued through the National Flood Insurance Program (NFIP), administered by FEMA, or may be sold by some private insurers.
A local insurance agent can help you purchase the insurance.
HOW MUCH IT INSURANCE COST?
The price of flood insurance is based on a number of factors, including your property ‘s flood risk , what the policy covers, and the amount of coverage you purchase.
According to FloodSmart.gov , you can purchase separate coverage for the structure of your home (generally up to $250,000) and your belongings (up to $100,000).
The types of coverage you purchase and the limits you set help determine the price of your policy.
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WHEN IS IT MANDATORY?
If your home is in a high-risk flood area and you have a mortgage with a federally insured or regulated lender, your lender is legally required to require flood insurance, says FEMA.
That’s generally not the case if your home is in a moderate to low risk area.
However, according to FEMA, a lender may require you to carry flood insurance at any time, even if the company is not legally required to do so.
To obtain an NFIP flood insurance policy, your community must participate in the program. Most communities participate, but not all municipalities in the country.
You can check if your community participates in the NFIP Community Status Book (click on your state and then look through the alphabetical listing of communities to see if yours is listed).
Although flood insurance is offered through the NFIP, policies are sold and administered by private insurance companies.
Most policies don’t go into effect until 30 days after signing, so it’s a good idea to consider buying coverage before storm season hits. Find an agent near you to discuss your flood insurance needs.
