Homeowner's insurance is an important thing for any homeowner to have. It covers your home and belongings if they are destroyed by disasters such as hurricanes, tornados, or fires. But many homeowners do not realize that standard homeowner's policies do not cover flood damage.
Flood insurance is not included in regular homeowner's insurance because most people do not live in places with high flood risks. It stands to reason that if one lives far from any bodies of water, they should not be required to pay higher premiums to be covered in the unlikely event of a flood. It is for that reason that flood insurance is sold separately from regular homeowner's policies.
Flood insurance is provided by the government through the Federal Flood Insurance Program. It can be purchased from your homeowner's insurance agent, but it is completely separate from your homeowner's policy. Flood insurance is relatively inexpensive, so if you live near a body of water it is well worth considering.
Those who are not in flood-prone areas may be able to get a lower premium on their flood insurance. Even if you're not near a body of water, flooding is possible from melting snow or water running downhill. If you might possibly be at risk for these occurrences, you may want to consider flood insurance as well.
Flood insurance covers the replacement value of your home and the cash value of your belongings. There is a limit to how much they will pay on both. To compensate, some specialized insurance companies sell excess flood insurance. It picks up where federal flood insurance leaves off, covering the remainder of replacement value on your house and cash value of your personal property.
Often people in flood-prone areas do not purchase flood insurance because the Federal Emergency Management Agency (FEMA) offers assistance after floods there. But FEMA can only provide assistance in areas that have been declared federal disaster areas. If the President does not make this declaration, those without insurance have no assistance in rebuilding.
It is important to remember that flood insurance has a 30-day waiting period. That means that if you go out and buy flood insurance after a flood warning is forecasted, your policy will not cover any damages that may be incurred from that flood. If you believe that you are at risk for flooding, getting flood insurance right away is the practical thing to do.
Flood insurance is not required by your lender in most cases. But if you get a federally backed mortgage in an area with high flood risk, the law requires you to have flood insurance. Whether it is required or not, flood insurance can give you the security of knowing that your damages are covered in the case of a flood.