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No home is entirely safe from possible flooding as it is the most common natural disaster affecting every state in the US. According to The Federal Emergency Management Agency (FEMA) “More than 20% of the claims that it handles come from low risk to moderate regions and more than 50 states have experienced flash floods or floods in the last five years.”

Flood insurance is not covered by your standard life insurance policy, so it is important to protect your home and belongings from floods associated with storms, dams or levees breaking, snowmelt, new development changing how water flows above and below ground, heavy rains, and much more. It can make a difference between recovering and being financially ruined. You should not risk it as only one inch of water in a home can cost you more than $25,000 in damage and you will have to pay out of your pocket or take a loan to replace the damaged items.

What Does Flood Insurance Cover?

A flood insurance policy can protect your house, apartment, condo, mobile home and even your business for losses due to floodwaters. Most flood insurance policies have two types of coverage: building coverage and contents coverage, and each offer a different kind of protection as each has their own deductibles and limits. Neither of these policies covers the land your home sits on. As a homeowner, you can purchase both the coverage’s but as a renter, you cannot buy structural coverage as you are not responsible for insuring the structure.

Building coverage

Building helps insure your residential and non residential building’s structure. The coverage limit for residential building’s structure can be up to $250,000 and non residential buildings up to $500,000.

Building coverage includes:

  • The building and its foundation
  • The electrical and plumbing systems
  • Central air conditioning systems, water heaters, furnaces, and sump pumps.
  • Cooking stoves, refrigerators, and built-in appliances such as dishwashers etc.
  • Permanently installed carpeting over an unfinished floor.
  • Window blinds
  • Fuel tanks with the fuel in them, solar energy equipment as well as water tanks and pumps.
  • Permanently installed paneling, bookcases, and cabinets.
  • Foundation walls, staircases attached to building and anchorage systems. “Loss caused by earth movement even if it was caused by flood is an exclusion.
  • Detached garage

Contents coverage

This covers the damage caused to contents inside your home. It includes:

  • Personal belongings like furniture, clothing, and electronic equipment
  • Portable microwave ovens, portable air conditioners, and portable dishwashers
  • Curtains
  • Portable window air conditioners (relocated or easily removed)
  • Carpeting not included in building coverage (carpets that are installed over wood floors, etc.)
  • Laundry washers, dishwashers, and dryers
  • Certain valuable items such as furs, and original artwork
  • Food freezers with the food in them (but not refrigerators)

There are two common methods of reimbursement for flood claims:

  • Replacement Cost Value (RCV): The amount it would take to replace damaged property at the current market value. It is reimbursable for single-family primary residences.
  • Actual Cash Value (ACV): Insurers will calculate depreciation using the age of the building and personal property (i.e. contents) and the amount of wear and tear it has suffered while in your possession. Therefore, the payout will be less than the market value. Personal property is usually reimbursed using ACV.

Exclusive For Building or Personal Property Coverage

The following are not covered by a building or personal property flood insurance policy:

  • Damage caused by mildew, moisture or mold that was not attributed to the flood, and could have been avoided by the property owner
  • Damage caused due to earth movement, even if the earth movement was caused due to flood
  • Additional living expenses (such as temporary housing) while the building is being repaired due to floods or if flood damage deems your home inhabitable.
  • Loss of use (or access) to the insured property.
  • Financial losses due to business interruption
  • Property and belongings outside of an insured building such as wells, plants, trees , walks, hot tubs, seawalls, fences, patios, decks and swimming pools.
  • Currency, precious metals and any valuable paperwork such as stock certificates.
  • Most self-propelled vehicles like cars (including their parts)
  • Most personal property stored in your basement like electronic equipment, furniture, bookcases, shelving, kitchen supplies, and window treatments.

You should be aware that in most situations flood insurance does not go into effect immediately but that there is a 30 day waiting period before a new flood policy takes effect. So, it is not possible for you to obtain flood insurance the day before a hurricane strikes.

Secondly, some people believe that they do not need flood relief insurance as they can count on the Federal Government Assistance. This is a misconception because federal assistance is available only if the President issues a major disaster declaration and even then the assistance is limited(less than half of all floods qualify for such assistance)

Talk to an agent at Chacha Insurance to make sure that you understand the coverage details and explore the many options of flood insurance.

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