Why flood insurance is separate from homeowner’s insurance?


Many homeowners face bafflement when they first discover that their sophisticated homeowner’s insurance does not cover damage caused by flooding. The latter is a completely different type of insurance offered by the federal agency NFIP through private insurers, and thus it requires a special understanding.

Do you need flood insurance?

If you reside in a designated flood zone, you are most likely warranted to have a flood insurance to safeguard your house and other contents damaged due to flooding.

Typically, if your house is located in an area that could be affected by melting snow, an overflowing pond or creek, rundown water off a steep hill, then you need to get this insurance.

Any homeowner could be at risk of flooding, so time is of the essence. There’s usually a 30-day waiting period before the coverage kicks in, you can avoid it by taking a decision to buy low cost flood insurance.

Understanding flood insurance

The US federal government provides home and flood insurance through NFIP run by FEMA. The NFIP policies are sold by private insurance agents such as Rais Insurance in California.

As per the federal guidelines, the NFIP provides coverage for up to $250,000 for the base structure of your home. This might not be sufficient to repair or rebuild your home from scratch, depending on the damage it has incurred. Also, you will be eligible for up to $100,000 for loss of personal possessions such as furnitures, clothes, etc.

It is equally essential to bear in mind that although NFIP provides replacement cost coverage, it is appropriated only for the actual cash value, which may be quite less for repairing or rebuilding if your home is old than 5 years.

Private market low-cost flood insurance

Private insurers in Northern and Southern California offer low-cost primary flood insurance that offer higher levels of coverage options than that of NFIP.

For those who live in a community that does not yet participate in the NFIP, or need an additional insurance protection, there is excess flood insurance that offers protection over and above the basic NFIP policy.

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