If you have basic insurance coverage for your home, there's no guarantee that it covers every type of accident or disaster. In fact, most homeowners insurance policies don't include coverage for major acts of nature, including earthquakes and floods, that can easily cause major damage. Adding a flood insurance policy will cost you extra, but the additional coverage can save you a lot of money in the long run.
When you opt to purchase a flood policy, your coverage could help you repair or replace belongings and cover the costs to repair damage to your home caused by a flood. You don't have to live near a dam or a major river to be at high risk of being affected by a flood.
Floods, by definition, affect an area of land that would usually be dry and out of the way of the normal flow of water. High flood risk areas are often known for extreme rain and snow, could be densely populated with limited drainage, are near a body of water or reside in a geographic low spot. Note that you'll need to buy separate policies to protect the physical structure of your home and your belongings inside the home. Additionally, a flood insurance policy may not protect you against every loss you incur due to a flood.
Here are some of the circumstances and expenses that might not be covered:. If you live in a high-flood-risk area and you take out a mortgage through a government-backed lender, you'll be required to carry flood insurance. Other lenders may require homeowners to carry flood insurance too.
To see if you live in a high-risk area, you can search your address using the FEMA flood map. But even if you don't live in a flood-prone region, your home could be at risk.
Uncontrollable factors like a poor drainage system, a broken water main, a major storm or construction in the neighborhood could affect any home. Like premiums for homeowners insurance , flood insurance premiums vary based on a handful of factors that may be out of your control.
Some of those factors include whether you live in a flood zone, the elevation of your property, and the type and amount of coverage you need.
To get quotes or purchase flood insurance, you can contact the company where you get your home or auto insurance, or you search through the National Flood Insurance Program NFIP. How to Save Money on Flood Insurance Some factors that determine your premium will be out of your control, but you can also take measures to reduce your policy cost. In addition to shopping around, here are some of the other ways you can bring down the cost of flood insurance:.
There's more to becoming financially stable and maintaining good credit than simply having good money habits. Monitoring your credit , reviewing your budget and saving for emergencies are all great ways to keep your financial life in good shape, but they're only part of the picture. Typically, homeowners insurance companies won't cover water damage as a result of a flood.
If you live in a higher-risk flood zone, you may want to purchase flood insurance from the National Flood Insurance Program NFIP or from a private flood insurer.
Depending on your policy, flood insurance typically covers the structure of your home and the contents in it, including:.
If you need higher limits because your home has a high property value, you may purchase a policy from a private flood insurer. Private flood insurance may either supplement your NFIP policy or completely replace it. Through the NFIP, homes are covered on a replacement cost basis while your personal property is insured for the actual cash value.
That means the NFIP will typically pay you the actual value of your covered belongings. If you choose a private insurer for flood insurance, they may cover your personal property at replacement cost. As a condition of the loan, your mortgage lender may require you to purchase a flood policy if you live in a high-risk area.
Otherwise, you're not required by law to purchase one. Even if you don't live in a high-risk flood zone, heavy rain, melting snow, and severe coastal weather may cause flooding. Renters insurance policies won't cover damage resulting from a flood. To protect your personal property against flood damage, you'll need a separate flood insurance policy. However, you'll only need to cover your belongings on your flood policy and not the actual residence.
It is your landlord's responsibility to insure the structure you live in. If you carry comprehensive coverage on a car damaged from flooding, your auto insurance policy may pay to repair or replace your vehicle.
A deductible typically applies. Like any type of insurance, your rate will depend on the risk. You'll obviously pay more if you live in a high-risk flood zone or an area prone to flooding. Premiums for private flood insurance companies will vary greatly based on location how close is your home to the water's edge?
Speak with your agent or insurance company to find out how you can purchase a flood policy. You may also get a flood insurance quote online through Progressive. Please note: The above is meant as general information to help you understand the different aspects of insurance.
Get more details from FEMA. You can buy national flood insurance issued by the NFIP through thousands of insurance agents nationwide. Check with an agent who sells homeowners or renters coverage for details. People who live in low- and moderate-risk areas and buy federal flood insurance pay standard premiums set by FEMA. These rates are the same regardless of where you buy your coverage. To get an estimate of your annual premium and a link to agents who sell federal flood insurance, go to the FEMA Flood Map Service Center and enter your property address in the search bar.
This will take you to the official flood insurance rate map for your area. You can also check My Flood Quote , a commercial site, to see your property on a flood map and get detailed estimates of premiums.
Renters, too, can get flood insurance. That may be particularly worthwhile if you live in a first-floor or below-ground apartment. Consumer Reports also can help you find a homeowners insurance carrier with the best track record for claims and customer service. Increasingly, private insurers are offering flood coverage. A few insurance carriers provide it as an optional rider on their homeowners coverage. Depending on your situation, you may find that private flood insurance has lower premiums than the federal version, says Craig Poulton, CEO of Poulton Associates in Salt Lake City, the underwriting manager and administrator of private flood insurer Natural Catastrophe Insurance Program.
Or it may require fewer add-on costs. The homeowner pays that bill. In addition, private coverage may cover your living expenses if you have to relocate while your home is being cleaned up after a flood. I cover the money side of home-related purchases and improvements: avoiding scams, making sense of warranties and insurance, finding the best financing, and getting the most value for your dollar. For CR, I've also written about digital payments, credit and debit, taxes, supermarkets, financial planners, airlines, retirement and estate planning, shopping for electronics and hearing aids—even how to throw a knockout wedding on a shoestring.
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