Home Insurance Articles
What To Look For When Considering Flood Coverage For Your Home Insurance
2010-03-24
Losing any part of your home or its contents can be devastating, and more than ever it seems that weather is conspiring to damage homes. Hurricanes, tornadoes, earthquakes and floods seem to be striking more often and more severely, leaving homes broken and their owners desperate. While most homeowners make the responsible choice to purchase home insurance, there are often situations in which a basic policy will not cover damage to a home or outbuilding, leaving the owner with no recourse but to accept the loss or pay for the damages themselves. One of the most common situations that are not covered by home insurance is if the house is damaged by a flood.
Minor water damage is typically covered under a home owner's insurance policy, and this includes such things as small leaks or a burst water pipe. Floods, however, are another matter entirely. A flood can often cause a total loss or at the very least severe damage to a home, such that an insurance company would be forced to pay at or near the maximum value of the policy out. For many insurers, this is too great a risk to assume on a basic home insurance agreement. Floods, along with other natural disasters, are often classified as "acts of God" in insurance policy terms, and this means that the insurance company cannot be held accountable to pay for any damage.
In areas where floods are common, two situations generally exist. In the first situation, the state government may mandate that all insurance companies in the flood-prone area offer water damage home insurance in the form of flood coverage to all of their clients. The amount of coverage will also likely be specified. Homeowners typically have the option to decline, but must do so in writing. In the second situation, insurance companies may have a flood coverage program which can be opted in to, or the program may be maintained by a separate flood-only insurance corporation, usually formed by citizens. In both of these cases, the amount of damage covered by this insurance varies according to the provider and the client's needs.
Deductibles for flood insurance are usually calculated as a percent of the total coverage. For example, a $50,000 policy with a 5% deductible would mean that the client would need to provide $2500 before the insurance company would pay in. Options exist to increase the deductible up to 10% of the maximum coverage amount, lowering the premium. Flood coverage will also be very specific about what items and buildings on the property it will protect, so be sure to speak to an insurance representative to determine exactly what is covered and under what circumstances.