If you will be purchasing a home in an area at risk for flooding—whether it be a high- or low-risk area—there are a few things you need to know about flood insurance.

First off, did you know that flood insurance not only protects your home or business’ structure, but also some of the contents, or personal property, inside of the home?  When purchasing flood insurance for a home or business, you can choose the amount you want covered, just like car insurance.  For the structures, flood insurance covers up to $250,000 for residences, and up to $500,000 for businesses.  If you want extra coverage for your home, business, or its contents, you can purchase an additional insurance policy through another company.

Secondly, did you know when you first buy flood insurance for your home or business, there is a 30-day waiting period until the insurance policy becomes effective?  This is true unless you live in a Special Flood Hazard Area and have your mortgage through a federally-regulated or insured lender.  If that’s the case, your policy will be effective shortly after obtaining it, if not right after.

Lastly, did you know that there are two common ways of being reimbursed after you file a flood insurance claim?  The first is Replacement Cost Value (RCV), and the second is Actual Cash Value (ACV).  Single-family primary residences are usually reimbursed through RCV, while all other buildings and personal property are reimbursed through ACV.  The RCV method is based off of how much it would cost to replace the damaged property.  The ACV method is based off of the RCV at the time of loss, minus the physical description.

If you are wondering what is and is not covered under flood insurance, you can take a look at the list below, which is provided by the Federal Emergency Management Agency.  Of course, these are just some of the items; you must consult your insurance policy company for a full list of items that are and are not covered.

Building Coverage Includes:

  • Insured building and other foundation
  • Electrical and plumbing in the building
  • Central air conditioning equipment, furnaces, and water heaters
  • Portable and window air conditioners
  • Refrigerators, cooking stoves, and built-in appliances
  • Portable microwaves and dishwashers
  • Clothing washers and dryers
  • Permanently installed carpets over unfinished floors
  • Carpeting that is not already included in property coverage
  • Clothing, furniture, and electronic equipment
  • Curtains

Not Covered Under the Insurance:

  • Damage caused by moisture, mildew, or mold that could have been avoided by the property owner
  • Currency, precious metals, and valuable papers, e.g., stock and bond certificates
  • Property and belongings outside of a building e.g., trees/plants, wells, septic systems, walls/docks/patios, fences, seawalls, hot tubs/swimming pools
  • Living expenses, e.g., paying for temporary housing
  • Financial losses caused by business interruption or loss of use of insured property
  • Most self-propelled vehicles, e.g., cars and their parts
Posted by Anthony Licciardello on


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