Read That Policy Carefully: Flood Insurance Coverages

Here’s a statistic that’s a real cause for concern. Only 12 percent of U.S. homeowners have flood insurance, according to a 2016 poll conducted by the Insurance Information Institute. Clearly, most homeowners who check their homeowner’s policy – and every homeowner definitely should – will quickly see that there is likely no flood coverage. That’s because flood insurance in the U.S. must be purchased separately through the federal government’s National Flood Insurance Program (NFIP).

It would be natural to think, “Well, my home isn’t near an ocean, lake, river or another flood-prone area, so why to be concerned?” Here’s why a bit more investigation would be in order. According to the Federal Emergency Management Agency (FEMA), all 50 states have experienced floods or flash floods in the past five years, and more than 20 percent of claims have come from moderate- to low-risk areas.

What to Do?

The first call should be to the homeowners’ insurance agent, who can look up the area in which the home is located and provide insight into the threat of flooding. The agent can also help the homeowner apply for flood insurance and explain the costs associated with coverage. Physical structure coverage is based on the replacement cost basis, but only up to $250,000. Personal contents coverage is based on actual cash value less depreciation, up to a maximum claim value of $100,000. A number of other exclusions do apply; cars, outdoor decks and fences, swimming pools, and mildew damage that could have been avoided are some of the many exclusions. So it’s wise to have a qualified insurance broker or agent as a guide. Remember, too, that when any flood or other water damage occurs, This Is No Time For Second Best®. Call Paul Davis for expert emergency cleanup, recovery, and restoration.