Choosing a Flood Insurance Coverage to Protect Your Home

27 May Choosing a Flood Insurance Coverage to Protect Your Home

For those of us living in Louisiana, it is no understatement to say that flood insurance is an important investment to secure the safety of your family’s home and belongings. With hurricane season officially starting on June 1, 2014, it’s important that you have a flood insurance coverage plan to protect your home and a flood preparation plan to protect your family. Choosing a flood insurance coverage can be a daunting task with so many coverage options out there. AWS Insurance experts want to assist you through this process by defining important characteristics of flood insurance coverage and how you can determine what coverage options are best for you. If for an unfortunate reason you ever have to file a disaster flood claim for flood damage, AWS Insurance is here to help.

What does Flood Insurance Cover?

Many homeowners learn after a flood occurs that homeowners insurance does not cover property damage or loss of belongings in the event of a flood and are left with nothing. Under federal law, it is required for you to have flood insurance in areas that are deemed with greater chances of flooding – but what about other areas? What you need to remember is that regardless of where you live, a flood can occur anywhere it rains. Ordinary homeowners insurance will protect your home from damaging winds caused by storms inflicting damage on your home, but will not cover the cost of rain leading to a sewage overflow that causes flood waters to enter your home – that is where flood insurance, and flood insurance coverage, comes into play – to protect your property and belongings from hurricanes, floods, and other rising water-related scenarios.

Property coverage includes the following:

• The establishment and its foundation
• Electrical and plumbing system
• Central A/C and water heaters
• Major Appliances (Refrigerators, Built-in appliances, Stoves)
• Carpeting over unfinished flooring

Belonging (content) coverage includes the following:

• Furniture and clothing
• Portable appliances
• Washer and Dryer machines
• Curtains

What Amount of Coverage is Offered?

The mandated flood insurance policy through the National Flood Insurance Program (NFIP) can provide maximum flood coverage of $250,000 for property and $100,000 for belongings.  The type of coverage available to you from the NFIP depends on where you are situated. In moderate-to-low risk flood locations, homeowners are eligible for flood coverage at the preferred rate. The Preferred Risk Policy offers the lowest premiums at a bundled (Property and Contents) package at a low rate. For those of us in high-risk flood locations, we are only eligible for the standard policy – which is not offered at bundled packages.  Keep in mind that flood insurance does have a 30-day waiting period from the date of purchase before the policy becomes active.

Rates and Deductibles

When reviewing the rates offered by the NFIP, it should be comforting to know that the rates are dictated by the NFIP – meaning they do not differ amongst insurance companies. These rates do, however, differ based on your risk location. If your home resides in a high-risk location, a higher rate will apply. In regards to deductibles, deductibles can differ based on your plan. You can opt for a higher deductible with a lower monthly premium, but risk a reduction in how much compensation you receive per claim.

How much Coverage Do You Need?

The best way to answer this question is to perform an inventory of your property and belongings (major contents) with an estimation of the cost of repairing or replacing them. Just remember to keep in mind how much the NFIP will reimburse per claim ($250,000 for property and $100,000 for belongings).  According to the NFIP Statistics, from 2008 to 2012, the average flood claim approached $42,000. Below is an example of a flood claim on House Logic for a 2,000 sq-ft home affected by 6in of floodwater.

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