Ah, the paradox of water. We soak in it to soothe tired bones and muscles, we relax to its sound falling against the window and on the roof, we frolic in the Atlantic Ocean at Virginia Beach, VA. Water nurtures life – without it man would not exist.
Yet it can turn deadly. When winter snow storms cease, the threat of flooding increases as the snow begins to melt and the rivers and creeks begin to swell. This is when we witness how powerfully destructive water can be. Flood, in fact, is the number one disaster in the United States, costing nearly $2 billion in insurance claims each year. The average claim is $46,000, according to the National Flood Insurance Program (NFIP). Sadly, only 15 percent of homeowners carry flood insurance on their homes. If you aren’t among them, do you have a spare $46,000 lying around?
Now, not all homeowners need the extra coverage that flood insurance gives. How do you know if you’re in that number? Let’s take a look at some common misconceptions that keep homeowners from buying the flood insurance coverage that may save them from some financial disaster.
My Homeowners Insurance Policy Covers Flood Damage
Oh? “Typical homeowners and renters insurance does not cover flood damage,” according to the Insurance Information Institute. You’ll need to purchase a separate flood insurance policy to be covered for flood damage.
Even if you have flood insurance, review your policy at least once a year to ensure that it gives adequate coverage for your current situation. NFIP, for instance, covers up to $250,000 for the home’s structure and, for personal possessions, $100,000. It is this latter coverage you want to pay attention to. If you have expensive items that could be damaged or lost in a flood, you may want to increase your personal possessions coverage.
Keeping in mind as well that even just a small water invasion into the home can be thousands of dollars in harm, flood insurance coverage becomes even more important.
Flood Insurance Is Too Costly
According to NFIP, you’ll pay an average of $650 a year for the peace of mind you’ll receive from carrying flood insurance. Compare that to the previously mentioned average claim of ($46,000) and the choice as to whether to buy the flood insurance or not is quite clear.
My Home Isn’t Located In A Flood Plain
When you buy a home it’s smart to check into whether or not it’s in a flood plain. Be aware, however, that “Many natural conditions can cause flooding: it could be spring thaws, or heavy rains, it could be hurricanes and the rapid accumulation of rain after a major wildfire are just some of them,” according to some experts at Allstate Insurance. It can happen anywhere and at any time.
Statistics show that in five claims for flood damage come from homeowners who live in areas determined to be in moderate to low risk of flooding, according to the Federal Emergency Management Agency (FEMA). The danger here is; lenders typically will not require the new home owner to obtain flood insurance on his/her home located in these lower-risk areas. It is up to the new homeowner get this protection for the property.
I Can’t Afford It Now – I’ll Wait Until …?
Would you wait until after your home burns down to try to buy flood insurance? No; and according to FEMA, “There is normally a 30-day waiting period after the first premium payment before the [flood insurance] policy becomes effective.”
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