Flood Insurance Policies
Floods can happen anywhere it rains and there are many factors that can contribute including new development and clogged drainage systems. The risk of flood in the immediate area dictates insurance premiums, but a policyholder can determine their deductible. The Federal Emergency Management Agency (FEMA) continuously conducts studies in communities that include statistical data from rivers, tides, rainfall and topography to determine the level of flood risk. The risk level of a particular area is shown at the site of the National Flood Insurance Program (NHIP) at FloodSmart.gov.
The average insurance yearly premium costs about $650 per year paid in full. The government regulates the cost so rates stay the same between insurance companies. If the property is damaged or destroyed by flood, the homeowner must meet the deductible before receiving the cash amount required to repair the damage or up to the policy limit for the value of the home. The maximum amount of insurance a homeowner can take out to protect their property against flood is $250,000.
Flood insurance is not a mandatory insurance unless a mortgage lender requires it and the property is in a high-risk area. It is available for all levels of flood risk to homeowners, renters, condo owners and commercial owners and tenants. The policies vary from moderate, low or high-risk areas and can include building and contents or contents only. FEMA sets the guidelines of included coverage such as certain permanent aspects of the building, like the foundation, walls and built in appliances (refrigerators, dishwashers and stoves), to the items not covered, like porches, septic systems and swimming pools, and limited coverage for areas below the lowest elevated floor, like basements and crawl spaces.
According to the NHIP even a couple of inches of water can lead to tens of thousands of dollars in damages. Coastal populations are not the only areas prone to flooding. A home far from any river or coast can experience a flood lasting for weeks from heavy rain or a snowmelt. Even in a low risk area, protecting against a flood can save a home or business owner thousands of dollars in damages.