At a time when hurricane season is in full bloom, there’s a renewed focus on the importance of flood insurance.
Flood damage caused by storm or surge is not covered in a standard homeowner’s policy, which covers a narrow range of water damage as a result of burst pipes or overflows.
But flood damage can be disastrous, costing Americans $8.2 billion each year according to recent statistics from the Federal Emergency Management Agency. Only flood insurance can swallow those costs.
"Flood insurance is not required of all homeowners, but if you live in a vulnerable, high-risk flood zone, your mortgage lender may mandate it,” said Kristina Lee, a licensed insurance agent at Zebra, an insurance comparison website. “If you live in a state that’s prone to hurricane damage and may require a separate hurricane deductible, flood insurance would work in tandem with the windstorm coverage of your home insurance policy to make you whole again after a covered loss.”
Know the limitations of your policies
If you’re enrolling in flood coverage through the National Flood Insurance Program, you should read the fine print. For instance, coverage for the structure of your home cannot exceed $250,000, while your personal property limit on average is $100,000.
“If you’re temporarily forced out of your home and need to find accommodations elsewhere due to flooding, NFIP coverage won’t cover your living expenses (also known as loss of use) or loss of income,” Lee said.
If you want more coverage, check out private marketplaces instead of the NFIP, Lee said.
Obtain an elevation certificate before you do anything
Before you enroll in any type of insurance, you need to obtain an elevation certification, which details the elevation of your home in relation to the Flood Zone and Base Flood Elevation, established by FEMA.
“An elevation certificate can be completed by a licensed surveyor or engineer and allows a homeowner to determine the potential of a home’s flood risk,” said David Resicher, real estate attorney at LegalAdvice.com, a legal advisory website. “[It] also is then used by flood insurers to determine the appropriate flood insurance rating.”
A typical elevation certificate will not only list a building’s location and lowest point of elevation but also the flood zone as well.
“Many municipalities and local governments use an elevation certificate to enforce local building ordinances,” Reischer said.
Don’t forget about the 30-day waiting period
If you’re thinking of flood insurance, the sooner you act, the better. There’s a 30-day waiting period from the time you apply to the time you receive the coverage.
“The biggest point people forget is the 30-day waiting period!” said Joelle Ferraiuolo, a risk solutions advocate at insurance marketing agencies. “This is in place to prevent folks who see a hurricane forecast from calling to place insurance urgently.”
Remember that contents in your basement are usually not covered aside from laundry machines, hot water tanks, or a furnace, Ferraiuolo said. So if you have personal items such as clothing and furniture, make sure to move them away from your basement.
Those who don’t live in coastal areas shouldn’t be complacent, he said. For instance, West Warwick, Rhode Island suffered a large flood about a decade ago, and many residents with no flood coverage had to pay out of pocket to replace their drywall and flooring. They could have just opted for low-cost flood insurance earlier that year.
If you are hesitant about the costs associated with flood insurance, find out what your local community is doing.
“If your community participates in flood mitigation, you may be eligible for a discount on the price of your policy,” said Bob Frady, CEO of HazardHub, a flooding data analytics firm. “What we've seen is that water does not obey FEMA's flood zones; it goes where it needs to.”
Read more information and tips in our Insurance section