The world of insurance can be overwhelming. You know that you have to have auto insurance to drive a car and homeowners insurance to secure a home loan. Both health and life insurance are helpful. However, how many times do you ask, “Do I need flood insurance?”
Let’s start with the first fact, homeowner’s insurance does not cover flood damage at all. Homeowner’s insurance will cover water damage caused by rain. If the damage is the result of rising bodies of water such as lakes, rivers, streams, or oceans, it will not be covered. To be specific, a flood is when there is water covering at least 2 acres of land that is usually dry. It is also considered a flood if two or more properties (one being yours) have damage. Lastly, the water has to come from an overflowing inland or tidal waters, or an unusual and rapid accumulation or runoff of surface waters from any source.
Flood insurance is a separate policy mostly purchased from the National Flood Insurance program (NIFP.) It is a federally regulated program that offers two different policies. The first policy covers your actual home (building) up to $250,000. The second policy covers your personal property up to $100,000, and you have the option to purchase both policies. Lastly, the truth of the matter is you might have to buy flood insurance if you are taking out a mortgage on a house that is in a high-risk zone or Special Hazard Flood area. Your lender will require you to buy a policy to secure the loan.
What the Federal Flood Insurance Program Covers
- The cost to rebuild your home or the actual value of your home ( whichever is less)
- Electrical & Plumbing Systems
- HVAC Equipment
- Kitchen Appliances
- Permanently installed carpeting to cover an unfinished floor
- Permanently installed wallboard, paneling, bookcase, and cabinets
- Window blinds
- Detached Garage ( limited to 10% of your home policy)
- Debris Removal
- Water Heater
Flood insurance will also cover mudflow or mud carried by water and when shorefront land collapses or sinks due to waters above “anticipated cyclical levels.”
What is covered in the Personal Property Policy?
- Clothing / furniture / and electronic equipment
- Window AC Units
- Portable microwaves/dishwashers
- Your freezer and frozen foods
- Up to $2500 in valuables; such as art and furs
Personal possessions claims are paid on actual cash values not what you paid for the items. It is important to note personal items that belong at the bank or in a safe deposit box will not be covered in the policy. These items include cash, stock certificates, bearer bonds, and precious metals.
Additional items not covered in flood insurance policies:
- Septic tanks
- Hot Tubs
- Swimming Pools
- Boat Houses
- Retaining Walls
- Storm Shelters
- Temporary housing/living expenses
- Loss of Incomes
- Post-flood Mold Damage
- Sewer Backups
Basements are another tricky situation because they have a higher risk of flooding. Be sure to read the fine print on the policy if you have a basement. (In Southern California, most of us don’t. ) There is also a limit on how many times you can collect on the policy. If you make four or more flood claims for more than $5000 each or two claims that total more than your home, NFIP will “offer” you a grant money to make improvements. However, if you take the grant money, the total amount you can receive from NFIP is $250,000.
If you are considering purchasing flood insurance be sure to take inventory of the possessions in your home because this will make filing a claim easier. Also, do not wait for an impending storm because there is usually a 30-day waiting period. Fall is the perfect time to consider adding flood insurance here in Southern California.
If you have any questions, give us a call at 562-896-2456!