Home Refinancing Magazine

Nobody knows when floods happen. These are natural disasters that can just strike the least we expect it. We may live in deserts or atop a mountain and still experience flooding.

In fact, 50 states have reports of flooding. The reason behind this is that hurricanes or tropical storms are not the only causes of natural flooding. Flooding inside homes can also be due to the flash flooding and rising river water.

In layman´s terms, flooding is the combination of mud and water in an area. So if the water is not wet on a normal basis but it still combines these two elements, then there is still the possibility of flash flooding taking place.

What does flood insurance cover? This is a question practical people ask. They know that flood insurance is a necessity for any homeowner.

It protects their assets and saves them from additional costs just in case flooding is something they have to include in their problems.

The coverage of flood insurance depends on the kind of plan your insurance company offers you. There is a definition that you should know. If you live in a 100-year flood plain, this does not mean that flooding in your area will just occur once in a 100 years.

In fact, a lot of people ask What does flood insurance cover when they are in a 100-year flood plain. They don´t know whether they should get an insurance or not because of this.

The solution to this confusion is to look at the flood maps in order for them to know whether the location of the home puts the homeowner at a risk when it comes to flooding.

The homeowner should know the kind of flood plain that the risk level he is in with the area that he is residing.

So after discovering the cost of flood insurance, the next question for homeowners is What does flood insurance cover. Well, imagine that there are a lot of factors that should be looked upon.

Flood insurance covers a percentage of the damages cost depending on the following factors. They look at the coastal policies of the client. For example, living along a coast gives the insurance holder a high premium.

In this scenario, the question to what does flood insurance cover is lower than people who are residing in an area that rarely gets wet.

As accommodating as insurance companies are to people who are looking for flood insurance, they still have to make a business and the coverage of an insurance policy really depends on the possibility of the area taking place.

The higher the possibility of this happening and the higher the flood insurance means the less coverage in actual cost.

What do you mean I’m not covered for flood damage? Unfortunately that’s what millions of homeowners are saying each year with shock and sometimes horror.

Of course they never thought it could happen to them, after all they don’t live in a flood zone. But nevertheless they experienced a record rain storm, sewage backup or county flood control failure.

The good news was know one was injured, the bad news is they didn’t purchase the right flood insurance policy or worse – they had no policy at all.
To help you avoid this fate, here’s the top 10 mistakes most people make when it comes to buying flood damage insurance.

1. Assuming you need to live near a large body of water, a flood zone or low lying areas to benefit from flood insurances.
Most floods are caused by several different causes aside from living near a large body of water. For example, rain, snow or ice storms, hurricanes, and water or sewage backup, in addition to dam or other flood control failure and more.

2. Assuming your standard home insurance policy covers flood damage.
This is one of the biggest reasons why it’s so important to stay educated and up-to-date on insurance matters. Why? Because most people assume they’re covered by flood or water damage in their standard insurance policy. Surprise! You’re not.

The fact is most standard policies don’t cover flood or most water damage. For this you’ll need a separate policy or rider.

3. Assuming you can’t buy flood insurance if you’ve been turned down by traditional insurance companies.
You can buy flood insurance as long as your community participates in the National Flood Insurance Program.

4. Assuming all flood insurance is too expensive.
The average flood insurance policy costs as little as $353 a year for coverage.

5. Assuming Federal Disaster Assistance will pay for flood damages.
Federal disaster assistance doesn’t pay for flood damages. At best it can help to provide low interest loans if you qualify – and only if the President declares the area you live in a disaster.

6. Assuming you don’t need flood insurance if you live in a low to moderate risk area.
Almost 25 percent of all flood insurance claims come from areas with low-to-moderate flood risk.

7. Assuming you must purchase a full flood insurance policy.
You may qualify for the Preferred Risk Policy (a lower-cost flood insurance policy) that provides contents coverage beginning at $39 per year.

8. Not finding out what’s covered by Replacement Cost and what’s covered by Actual Cash Value?
It’s important to find this out to make the best informed decision of what kind of policy to purchase and who to purchase it from.

9. Assuming you’re covered from flood damage if you rent.
Your landlords policy only insures the building not your personal property. However, you can purchase an insurance policy for your personal possessions.

10. Taking The First Policy You Come Across.
The best method of buying the most coverage for the best price is to comparison shop at least three different companies. You may be surprised at the price and/or service difference. By taking the time to follow and remember these 10 guidelines you’ll avoid the mistakes many people make when buying flood damage insurance.

When looking at how much flood insurance costs, first and foremost, you should weigh the potential cost against how much it would cost you to go without insurance. The difference would be huge. There are few of us who could afford to underwrite the cost of rebuilding out of our own pockets should we lose our home and possessions to a flood. That is why you carry flood insurance; it helps with the cost of starting over if you are the unfortunate victim of a devastating flood.

How much flood insurance costs vary widely depending on where you live. If where you live is at little or no risk for flooding, your flood insurance rates will be much less than if where you live is at high risk for such things as hurricanes or flash flooding. According to many surveys, as of 2009, flood insurance premiums cost anywhere from just under $350 per year to more than $3,000, depending on the predetermined flood risk for where you live. While some will see this cost as being way more than they can take on, you should consider the fact that you couldn’t possibly rebuild your home if it were destroyed by flood for anywhere near the upper limits of the flood insurance spectrum.

Remember, the cost of flood insurance is determined by how much of a risk your home or business is for flooding. For the best rates possible on flood insurance, you should try to buy your flood insurance through the National Flood Insurance Program — see an approved agent today. The NFIP was created to make sure that everyone who owns a home would have a means of getting flood insurance at a price they can afford. The federal government determines and regulates the rates, so any agent taking part in the National Flood Insurance Program should quote you the exact same cost. You must also take into consideration the fact that the NFIP program has upper limits on its payout that will not meet full replacement coverage in many areas, so you may wish to get excess flood insurance.

While flood insurance is not necessary for everyone who owns a home, it is an invaluable asset should the unthinkable occur and your home is caught in a devastating flood. The National Flood Insurance Program was created by the federal government for exactly this reason: to make sure that all homeowners have access to flood insurance that they could afford. Do not allow yourself to be counted among those who lose everything to a flood — protect yourself, your home, and your possessions. Loss of everything by flood happens much more often than you might think.