There are some common myths out there regarding floods and flood insurance. I enjoy the television show, MythBusters. So, I’m going to attempt to bust those flood myths. I don’t have any fancy explosive devices or wire harnesses or giant sledge hammers, just information I got directly from the government’s websites. www.fema.gov and www.floodsmart.gov (Maybe we should start an Insurance Myth-busters television show…)
Myth 1: My homeowners policy covers my home and personal property against flood.
FACT: Most Homeowners policies do NOT cover damage by flood. The good news is that a flood policy can be purchased, often from your local agent. Flood policies are provided by the National Flood Insurance Program (NFIP) and Homeowners can purchase coverage on their home and their personal belongings. Remember, your home might just be your single most important financial asset. Make sure it’s protected.
Myth 2: You don’t need a flood policy because you’re not in a high-risk flood zone.
FACT: Technically, everyone lives in a flood zone. Statistics indicate that about one-third of all flood claims are for damages to buildings that are not in high flood areas.
According to www.Fema.gov, flooding is the nation’s most common natural disaster. In fact, if you click the “flood” link under the “Are you Prepared” section of the homepage, you will find great information regarding preparing yourself for a potential flood.
Further, the average flood claim over the last 10 years has amounted to nearly $48,000. WWW.floodsmart.gov has a unique tool to help you estimate the cost to repair damage done by a flood. For instance, using the link, a home of 1000 square feet, with up to six inches of water on the ground floor could experience damages adding up to over $20,000. The same home with only an inch of water covering the ground floor could experience damages over $10,000.
The best reason to buy a flood policy is because flood damage is expensive!
There’s more good news! The government has developed Preferred Plan, which is available for homes in low to moderate risk areas. This plan offers flood insurance at lower costs. Your agent should be able to help you determine whether your home is eligible for this program. As an example, a flood policy for a home in a low-risk flood zone could provide $100,000 of building coverage and $40,000 of contents coverage for about $300 a year.
Another important thing to remember is that if you are attempting to secure a loan for a home that is located in a high-risk area, the bank may require you to buy a flood policy.
Myth 3: You cannot buy flood insurance if your home has been previously flooded
FACT: You are still eligible to purchase flood insurance as long as your community participates in the National Flood Insurance Program. Further, you can purchase a flood policy at any time. However, there is normally a 30-day waiting period before the policy takes effect, unless the policy is required by a bank for settlement on a loan. The policy will not cover any flood losses that occur until after the policy takes effect. So, if you buy a flood policy just before or during an actual flood, the policy will probably not cover the damage that might result from that particular flood.
Myth 4: This last myth I want to discuss could be approached in a couple of ways. Some people I’ve talked to assume a flood policy will cover all of their personal contents in their basement. Others assume that the flood policy covers none of their property in a basement.
FACT: The fact is most personal belongings in a basement are NOT covered by a flood policy. However, there are some building-related items that are covered.
Covered Property in a Basement (If connected to a power source and installed in their functioning location)
- Sump Pumps
- Furnaces, water heaters, air conditioners and heat pumps
- Foundation Walls, staircases and elevators
- Unpainted drywall for walls and ceilings
- Electrical Outlets, switches and circuit breaker boxes
- Washers and Dryers
- Food Freezers and the food in them (but not Refrigerators)
Property Not Covered in a Basement
- Basement improvements such as finished walls and flooring
- Personal belongings such as clothing, electrical equipment (TVs) and furniture
- Kitchen or bathroom supplies
- Bookcases and window treatments
In summary, it doesn’t take two guys with expertise in physics and special effects to understand the basics of flood insurance. Just some simple research.