Flood Insurance

Flood is a temporary phenomenon in which usually dry land areas are submerged in water spread out from inland or tidal waters. Flood insurance is not a component of the majority homeowner’s insurance policies. Homeowners’ insurance is responsible for restoring your home back to its original condition after the loss. However as mentioned above flood insurance is not covered in the majority homeowner’s policies. Flood insurance covers breakage losses to buildings including base of buildings, posts, pilings, piers, or other support systems for tall buildings. Flood insurance also covers medical expenses for physical losses caused by a flood or from flood-related wearing down. This wearing down may be caused by a flash flood, an irregular tidal rush, or extreme waters resulting from a severe storm. Flood insurance also caters damage caused by landslides. Flood insurance is a special insurance policy (financially) supported by the Federal Government and issued in cooperation from local communities and insurance companies. Over 18,000 communities all across United States of America have introduced precautionary measures to control flood related damages. Residents of these communities can purchase flood insurance from the National Flood Insurance Program with the exemption of property owners on certain coastal properties that are not included in the program.

Introducing construction practices that help reduce the impact of structural damages and limiting development in high flood risk areas can also high costs of floods. Flood insurance is often not offered to residents of communities not included in the National Flood Insurance Program. Probability of floods is four times the probability of fire. Floods can happen anywhere even outside the recognized flood plains. Flood insurance is a must have for residents of flood prone areas particularly those living in high-risk flood areas. However this by no means implies that low risk flood areas have little or no risk. It may be a fine idea to buy flood insurance even though you live outside the high-risky areas. Flood insurance is often available at discounts for residents of low risk areas. Very few private insurance companies are interested in selling and servicing the National Flood Insurance Program for the federal government because of the high costs of flood related claims. Flood insurance supplements your homeowners’ insurance policy and offers extra cover above the face value of your homeowners’ insurance policy. It is a must have because homeowners’ insurance does not cater flood related damages. Very few people purchase flood insurance despite reasonable premiums. However it can turn out to be the most costly mistake of your life! Since very few companies provide flood insurance it may be hard to shop around and compare premiums and cover provided. Purchasing flood insurance through an agent is a good plan. He will help you decide the amount of cover to purchase, the amount of contents coverage needed, how to avail discount on premiums etc.

Certain provisions within the National Flood Insurance Program may lead to higher premiums because of the high risk properties being occupied by people less likely to recover from flood hazard. Demand for aid is much higher in such cases. Some factors contributing to increased demand for aid are:

• Flood insurance for properties in flood risk areas is compulsary only to secure mortgage loans. However it is not compulsory for senior citizens or investors who have paid off their mortgage loans and own the property in question.
  
• Also keep in mind that flood insurance covers losses to the owner of the property only. Tenants will not be reimbursed for damages to their valuables.
  
• Flood risk properties are more likely to be offered for rent and that too at a discount to attracts lower income groups.