The Murzzy Blog
There are many risks that people are accustomed to insuring against. These include risks associated with health, automobiles, and house. There are other risks that are either less familiar or there is confusion about how to protect against them. An example is flood damage. Most people may believe that flood damage is covered by their home insurance policy but this is not true.
Is a Flood Really a Flood?
Before discussing flood insurance, lets first look at how insurance defines a flood. The dictionary definition of a flood is an "overflow of a large amount of water beyond its normal limits, especially over what is normally dry land." Insurance, on the other hand, goes further by recognizing flood only if the overflow of a large amount of water covers 2 or more acres of normally dry land or impacts 2 or more properties. Otherwise, at least from an insurance perspective, what we may commonly understand as a flood is really not a flood.
Key Flood Facts
Having understood the insurance definition of flood, let us now examine the risks associated with floods. Did you know that over the past 5 years, every state has experienced flood damage making flooding the number 1 natural disaster in the United States? The Dec Page also points out that from 2005 to 2014, over $35 billion in flood claims have been filed. Suffice to say, flood damage cannot be taken lightly.
The National Flood Insurance Program
Now let's look at how to protect against flood damage. First off, a standard home insurance policy covers many perils such as fire, wind, and theft but it does not cover flood damage. Whereas, a flood insurance policy only covers flood damage. In order to cover flood damage, the first option usually is the National Flood Insurance Program (NFIP). This program was established in 1968 with the passing of the National Flood Insurance Act. It provides up to $250,000 in coverage for the structure and up to $100,000 in coverage for personal property like furniture and appliances. We will cover the National Flood Insurance Program in more detail in another article but it is to be noted that it has limits and restrictions that are important to understand and overcome.
Other Flood Insurance Options
Besides the NFIP, more and more insurance companies are starting to offer private flood insurance. It is possible to overcome the limitations and restrictions associated with the NFIP with private flood insurance but figuring out the differences and properly comparing against the NFIP may require insurance knowledge and/or expertise. This is crucial because private flood insurance is not backed by the government so customers are left to deal with insurance companies and their varying coverages and claims handling procedures.
Another option that is becoming available is for home insurance companies to add flood coverage through a special policy endorsement. This option has its benefits because all risk associated with a home can be covered under one policy but once again, it may take insurance knowledge and/or expertise to decipher if the flood endorsement is providing the required coverage.
Tropical Storm Harvey by AP Photo/David J. Phillip
Points to Remember
It may not be a good idea to figure out flood insurance yourself. Work with an independent insurance agent because they work for you not the insurance company. Call our experts at (813) 327-4900 or email us at firstname.lastname@example.org
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