According to FEMA, floods are the most common disaster in the U.S. Floods caused over $3.2 billion in damages in 2017 alone. Unfortunately, many homeowners do not realize that a standard New Jersey homeowner’s insurance policy does not protect them or they don’t bother to buy flood insurance.
The Consumer Federation of America estimated only 20 percent of homeowner’s had protection from Hurricane Harvey flooding.
While the debate still rages over whether global warming increases storm frequency, data suggests it increases intensity. Studies show the continental U.S. now experiences more flooding, so all homeowners should consider flood insurance an important part of property protection.
Do I Really Need Flood Insurance?
Federal law mandates lenders require flood insurance on mortgaged properties in high risk areas, but your lender may demand it even when you don’t. Mortgage-free property owners may also choose not to buy coverage; however neglecting flood insurance can be a very costly mistake.
According to FEMA, a 2,500 sq. ft. one-story home with $50,000 possessions would cause $26,807 in losses from just 1 inch of water. Of course more water, more possessions, or larger premises cause greater losses.
FEMA statistics also show more than 20 percent of flood claims come from properties located outside high-risk flood zones. Some people mistakenly believe that they’re well-protected by federal disaster funds, but do not realize they only receive aid if the area is declared a disaster zone and even if they get do help, it is in the form of a repayable loan.
Luckily, your agent can check whether you live in a National Flood Insurance Program (NFIP) covered community. Renters, homeowners, and business owners within these communities can buy a policy through a local independent insurance agency like ours for protection.
What Flood Insurance Does & Does Not Cover?
NFIP provides up to $250,000 in property coverage. You can choose either replacement (cost to reimburse you for the cost of new materials and construction) or actual cash basis (cost less depreciation).
You must buy separate actual cost basis coverage for your contents up to a maximum of $100,000. Renters only need contents coverage and flood insurance only covers damage “directly” caused by a flood.
If you want additional coverage or you reside in a community that does not participate in NFIP, some private insurers offer policies and most policies do not have deductibles.
Flood insurance covers essential home items such as the building and foundation, electrical and plumbing systems, HVAC, appliances, and permanently installed carpeting, paneling, wallboards, and cabinets. It also covers up to 10 percent of the building property coverage limit for a detached garage.
It is important to note coverage does not include damage the homeowner could avoid, such as mold and mildew caused by neglect after an event. It also excludes cash and stocks, landscaping, fences, decks, and pools and living expenses if you need to live off-premises during repairs or rebuilds. Businesses are not reimbursed for income loss due to business interruption either.
It’s important to note that policies usually have a 30-day waiting period before they go into effect.
How Much Does it Cost?
The average cost of an NFIP policy in 2017 was about $700, but prices vary widely and depend on many factors. These include the:
- The Flood zone you live in
- Age of the structure
- Floors in the structure
- Location of your belongings in the structure
- Deductible you choose
- Coverage you choose
When Can I Claim?
Damage caused by a flood or flood-related erosion qualifies for a claim when the flood damages at least two properties or it covers at least 2 acres.
If you need to file a claim for damages, call your agent as soon as possible. They will send an adjuster to your property to access the damages and prepare a room-by-room report of the damages for your review. If you agree, the loss is settled. You can also appeal their estimate when needed.
Insurers highly-recommend all renters and property owners prepare a home inventory to record their possessions. It speeds the claims process and can ensure your claim includes all damaged possessions.
You can only purchase flood insurance through your insurance agent, so why not review all your insurance coverage with them at once? Reviews eliminate insurance gaps, find appropriate discounts, and ensure you have the best coverage at the lowest cost.