Flood Insurance – Everything you Need to Know

According to The U.S. Federal Emergency Management Agency (FEMA), roughly 13 million Americans are living within a 100-year flood zone. Flooding is one of the most common and devastating natural calamities in the United States. It has the potential to wreak havoc on entire communities. It not only demolishes neighborhoods but also displaces families.

Heavy rains, faulty drainage systems, melting snow, and failing protective barriers like dams can all cause flooding. And even a single inch of water can cause significant damage to your home. Thus flood insurance California is a must-have for homeowners.

Flood insurance generally offers two types of coverage —

  • building property coverage; and
  • personal contents property coverage.

Nevertheless, homeowners must be aware of the following factors regarding flood insurance:

  • Though standard home insurance policies cover water damage caused by a frozen pipe, they do not offer coverage for flooding. Thus, you need to purchase a flood insurance policy separately. However, if you reside in a high-risk flood hazard area, you must buy a flood insurance policy.

Several insurance agencies offer flood insurance California for both residential and commercial properties.

  • Flood insurance is provided by the federal government through the National Flood Insurance Program (NFIP), which is managed by the Foreign Exchange Management Act. While the government underwrites and issues flood insurance, the flood insurance policies are marketed by private insurance brokers who function as an intermediary between the homeowner and the NFIP. However, you must keep in mind that NFIP insurance policies are not offered by all insurance companies.

Building property coverage is available through the NFIP, and it is quite comparable to dwelling property coverage. It protects your home’s physical structure as well as its foundation. It includes everything from water heaters to kitchen equipment to electrical and plumbing. In terms of building property coverage, you’re insured for around $250,000. It covers your home for the cost of replacement rather than the market value.

If your property is flooded, this insurance will also cover any repairs up to the maximum amount you are covered for.

Personal property coverage can be purchased separately, just like it is in a standard home policy. It covers personal property inventory up to $100,000 in value. However, depreciation value is taken into account. For example, if you invested $8,000 in your home theater system a decade ago, and it gets damaged in a flood, your insurance company would reimburse you for the cost of replacing the system today. Personal property coverage also covers your clothes, furniture, and other personal belongings.

Some insurance companies also provide private flood insurance or additional flood protection that is not backed by the NFIP.

What’s more, based on where you reside, some private insurance is also backed by

the state through a guaranty fund. If your insurance company goes out of business, this form of coverage comes in handy since your state will pay the guaranteed compensation.

To find out if you need private insurance, do some research and compare the numbers, then gather some quotations from private insurers.



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