Are you flooded?

Often times when you buy a new home, the lender may require flood insurance. This is especially true if you live in an area prone to flooding or if your home is on a floodplain. Flood insurance, required by federal law, protects you in the event of a flood caused by natural disasters. It is important to understand that this is different from the insurance that is part of the normal homeowner plan, which covers flooding caused by pipes.

If your home is in a legally classified high-risk area, you must purchase flood insurance. Homeowners of flood-prone areas must also have flood insurance for properties within the designated zone. Homeowners can choose to cancel this coverage after their loan has been fully repaid, although it is always safer to keep the policy whenever possible.

There is generally a thirty day waiting period before claims can be made. The only exception to this rule is when the lender requires the insurance as a loan stipulation. Due to this waiting period, it is always advisable to start your policy before the start of the hurricane or flood season in your area.

Flood insurance generally covers not only damage caused by floods, but also protects you from flood-related disasters such as landslides, sewer overflows, and fires. The price of your policy will depend on several factors, including the building’s year of construction, occupancy, number of floors, the risk factor for your location, and the deductible you choose. There are several websites available online that will help you calculate your risk factor at no charge.

When shopping for flood insurance, it’s important to shop around and compare the components of the policy, as well as the price. As with any type of insurance, prices will vary significantly from company to company. You can often get discounts by combining insurance policies with your current auto or home insurance provider. Selecting a higher deductible will also lower your out-of-pocket expenses initially, but it is important to make sure that you are setting a deductible that you can reasonably pay in the event of a disaster.

Many people who own their homes without a mortgage payment think they don’t need to keep their flood insurance, especially if they are in a low-risk area. Contrary to popular belief, low-risk areas flood quite frequently. An estimated 25% of flood insurance claims come from homes in low-risk areas, so don’t be fooled by this mistake.

Most importantly, don’t let your policy lapse. All flood insurance policies expire at 12:01 am on the last day of their validity; however, you will be covered for thirty days after the policy expires. If you have a claim during that thirty day period, it will be covered as long as the new policy is paid in full before the grace period expires. It’s best not to take chances and keep track of your policy’s expiration date to be safe.