Flood insurance is a crucial consideration of owning a home in storm-prone areas like Florida. But many homeowners have a lack of understanding, and many misunderstandings, about this type of coverage.
To help you decide if flood insurance is right for you, here are four misconceptions about flood insurance and the truth behind them.
You Can Buy Only if It's Mandatory
In areas known to be prone to flooding, you may be required by your mortgage company to purchase either a separate flood insurance policy or an add-on provision to your policy, called a rider.
However, this doesn't mean that everyone else can't buy the insurance as well. Flood insurance is generally open to all homeowners or business owners, whether or not it's required.
Mortgage creditors generally require coverage if they are covering property inside a known flood plain. But your risk of flooding from other things like dams, storms, and urban sprawl could mean that flood insurance is a good idea to look into, even if no one is requiring it.
If you don't have a mortgage, you should cover your investment even more carefully.
Homeowners Insurance Covers Flooding
In fact, homeowners insurance policies rarely cover flooding in a way that protects homeowners from much of the risk. Water damage from pipes or from wind-blown rain is often covered alongside other natural damage.
If your roof is ripped off by a hurricane, for example, you could be protected. But if the flood occurs from the ground up, you may be out of luck even in the direst of circumstances.
Check with your insurance agent to make sure you understand your specific coverage and how it handles various types of water damage.
You'll Be Notified if Flood Insurance Is Needed
Most homeowner won't find out that their home is a flood risk unless the mortgage holder requires it. Flood maps can be years out of date due to modern city development and suburban sprawl. Also, there are few requirements that owners be notified of hidden risks to their homes.
In addition, many flood insurance claims come from properties outside recognized flood plains. In recent years, for example, a number of homeowners in Texas suffered massive flooding from Hurricane Harvey even after builders identified their area as out of danger for flooding.
You can research your own subdivision or neighborhood in original city zoning documents and federal flood maps to learn more for yourself. Look thoroughly through past maps to determine if original plats noted any danger that was not carried onto further mapping.
Flood Insurance Doesn't Cover Enough
The federal government offers flood coverage through the National Flood Insurance Program (NFIP). This insurance covers up to $250,000 of your main home's property, but it does not cover external features like septic systems, decks, outbuildings, and cars. You may choose to purchase additional coverage for personal belongings.
As with most insurance policies, there are different deductibles and limitations for each policy, so you can tailor it somewhat to your needs. However, there are always limits.
With current home values often rising far above the $250,000 limit, you are likely to need additional coverage, which is available through private insurance companies.
Private insurance coverage can supplement the federal insurance, often by providing for a $250,000 deductible to coincide with the smaller coverage. Depending on your personal belongings, you may also need to buy more insurance for things like high-value collectibles and expensive equipment.
Is flood insurance right for you? With a good understanding of what's true and what's not, you can make the decision based on accurate information. For more assistance finding the right policy for your Palm Beach area home and goods, talk to our insurance pros at Insurance Designers today.