Top Myths About Flood Insurance

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A flood insurance policy covers damage to your property in case of floods, water surges, or flood-related mudslides.

Myth #1: My home insurance already covers flood insurance

Your homeowner’s insurance does not typically cover floods unless explicitly specified. You must apply for additional coverage via the National Flood Insurance Program (NFIP) or your private insurer. Talk to your agent to determine the scope of your policy, primarily if you reside in a designated flood zone or a storm’s path. If you are uncertain you need this insurance, you can check with the NFIP website.

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Your homeowner’s insurance may cover property damage if rainwater enters your house during a heavy downpour. Your insurance company typically considers this as a windstorm rather than standard flooding. It’s best to clarify this with your agent to determine the extent of your insurance coverage.

Myth #2: Flood Insurance only covers homeowners

Coverage also includes commercial establishments, industries, utilities, retail shops, and others. If you rent your home, you can apply for one to cover losses following a flood. Of course, you cannot claim structural damage since you don’t own the house.

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The risks are even higher if you are a business owner, especially if you cannot afford further expenses due to your strained budget. You must know, however, that flood insurance does not cover profit loss or business interruption.

Myth #3: You don’t need flood insurance if you reside outside the hazard zone

A Bloomberg report revealed that home and business owners underestimate flooding risks by 67%. They consider themselves safe since they are outside any government-designated hazard zones. In reality, about 6,000,000 people or more are at risk of flooding, more than what is reported in government data. To date, 1 in 10 properties in the US is in danger of flood damage.

Climate change has drastically altered how natural disasters cause destruction. Storms seem to be getting more destructive, and floods continue to rise higher. In fact, a third of claims payments came from areas outside the flood plains.

Myth #4: I won’t be eligible since my home has been flooded several times before

The total score: Flood insurance is designed specifically to protect people in flood-prone areas. You are eligible for protection since your house has been through numerous catastrophes. Inquire from your agent about what policy is best for you. In fact, you can buy your policy even if your house is still submerged under high waters. Know, however, that the protection may only be claimed after a month. It is always a good idea to purchase sooner than later.

Myth #5: Flood insurance is a scam because someone I know wasn’t paid

The Federal Insurance Office oversees all legitimate insurance companies. You can file a complaint with them if you feel you have been short-changed. Flood insurance scams happen all the time and this could take place due to several reasons. For one, the victim may have applied for a policy from a fly-by-night operator who promised cheap rates. It’s crucial to always check online reviews, a local council, or your local consumer group to determine an insurer’s legitimacy.

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Another reason could be a misunderstanding. There are two types of flood insurance: one covers structural damage while the other covers one’s belongings. You can apply for either protection or both. Therefore, the claimant might be asking for a payment that his insurance does not cover. Nonetheless, flood insurance is a legitimate policy that even the government, through the NFIP, offers to homeowners and business owners alike.

Myth #6: Flood insurance excludes basements

Due to the nature of their construction, basements are prone to flooding even without strong rains. You can apply for a claim for repairs and cleanup in case your heater, furnace, water pump, or circuit breaker boxes are damaged. However, the protection typically does not cover expenses to repair your basement.

Myth #7: Private insurance is costly

Most people are unaware that private companies actually sell federal flood protection. For example, the NFIP lists more than 60 companies as its partners so that they can sell the product to their customers. You can save a lot of money this way. Typically, however, the policy is not as expensive as you think. The average insurance cost for homeowners is between $60 and $80 a month. Of course, the final premium varies according to your state, conditions, insurer, and other factors. Expect to pay higher if you live on a flood plain because the insurance company absorbs more risks.

Talk to an Agent for Flood Insurance Today

This article only addressed the most common questions regarding flood insurance. You might have other concerns and specific needs that need to be clarified. It is best to talk to an agent and present a real-life scenario that applies to you. List down your questions to make sure you don’t forget anything.

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