Flood Insurance Policies
Flood policies cover damages to physical buildings and property in the event of flooding. These types of damages are typically specifically excluded by traditional homeowner’s insurance policies.
Who needs coverage?
If you live in a high-risk flood zone and have a mortgage through a federal-insured or regulated lender, you will be required to purchase a flood policy. Mortgage companies can actually require borrowers to buy flood coverage even when not mandated to do so. It is important to remember that you don’t have to live in a high-risk area to experience a flood. They can happen anywhere at any time due to a sudden heavy rain or a spring thaw, so it is a good idea for all homeowners to consider purchasing a flood policy in addition to their traditional homeowner’s policy.
How do flood policies work?
Flood policies cover flood-related losses to personal and physical property, including:
• The building and its foundation.
• Damage to electrical, plumbing, and HVAC systems.
• Debris removal.
• Personal belongings.
• Certain household appliances.
Most flood policies do not cover damage from mold or mildew that could have been prevented, property or belongings outside of the covered building, and vehicles.
What types of coverage are available?
Flood policies can be purchased through the National Flood Insurance Program or private insurers. Private flood policies are a relatively recent phenomenon and are only available through a few major insurers. They also tend to be more expensive than the policies offered through the national program. Both types of policies provide similar coverage for buildings and personal property. Private insurance may offer additional coverage, such as reimbursement for temporary living expenses.
What are the benefits?
In addition to covering flood-related losses, flood policies offer other advantages, including:
• You can be reimbursed for your damages even if the area is not declared a federal disaster area.
• Many federal disaster relief packages are loans that require repayment. Flood policies pay covered losses in full without the worry of repayment.
Speak to an insurance professional today if you have further questions about flood policies or their benefits.
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