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What You Should Know About Flood Insurance by Anne Sadler

If you were among the lucky ones not affected by the recent flooding then you probably can’t understand how devastating the aftermath of a flood can be on your property and your finances. If you were affected and don’t already have flood insurance, you need to know if you can qualify for flood insurance in the future and what it does and doesn’t cover. Did you know that no home is safe from the potential of a flood and that homeowner’s insurance typically doesn’t cover damage from flooding?

If your home is located in a flood zone your mortgage holder will probably require you obtain flood insurance as a condition of your loan. If you don’t have a mortgage and you live in a flood zone you should still have flood insurance. You can only purchase flood insurance through an insurance agent, you can’t buy it directly from the government. To find out if you live in a qualifying area you can visit the FEMA (Federal Emergency Management Agency) website at: type in your address and choose interactive map.

You need to ask your insurance agent what is and is not covered by flood insurance. The contents of your home are not usually covered by flood insurance, you will need a separate policy to cover your belongings. There is also a 30 day waiting period between when you initially buy flood insurance and when it goes into effect.

If you live in an area where flooding occurs you may be under the assumption that you can just get federal disaster assistance to cover your damage. Most of the federal disaster relief goes to cover infrastructure damage and only about 15% actually goes to homeowners. The typical payout that goes to a homeowner is around $4000 and that is usually not nearly enough to cover the damage. By contrast, if you have flood insurance the payouts are much higher and may pay enough to get your home replaced, in severe enough cases. Without flood
insurance your options are limited. You can hope to get a small payout from the federal disaster funds, you can take out a personal loan or use your savings to repair the damage. Not all homeowners have the capability of taking out a loan or have the cash on hand to pay for the repairs themselves and even if you get assistance from the federal government it can take months or longer to receive the money. The average cost to repair a flood damaged home after a minor flood is $12,000 and that can be much higher after a significant flood event like we just had. The water damage can quickly turn into toxic mold which is a significant health hazard and is also very costly to mitigate.

The National Association of Realtors is helping to lobby the federal government for changes to the federal flood insurance program. Some of the things they are asking for are: additional coverage for basements, one deductible that applies to both the structure and the contents and increased amounts allowed for temporary living expenses. The government will be undertaking the reauthorization process for the federal flood insurance this year and will hopefully implement some of these changes.

For more information about flood insurance contact your local insurance agent or visit the FEMA website. Take steps now to protect your home and belongings so you are protected if we have another significant flood event.

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