This time of year, it seems as if every time you turn on the television there's another story about flooding and the damage it can cause. Most people do not know that a standard homeowners policy does not cover flooding. And, even if you don't live on the coast of Florida, you never know when a heavy rain storm or flash flooding could damage your belongings. Here's what you need to know to make sure you make the right insurance coverage decision.
Replacement Cost vs. Actual Cash Value
When determining the amount of coverage you need, remember the difference between replacement cost and actual cash value and how that impacts your claim. For example, replacement cost coverage is used to rebuild your home as it was before the damage occurred. This coverage relates to the structure of your home. Actual cash value is what you'll be awarded to replace the possessions within your home. This coverage is the replacement costs of your home minus depreciation. Also, keep in mind that if you store items in your basement, there might be additional limits.
Designated Flood Zones
If you live in a designated flood zone, you'll definitely need flood insurance. But, keep in mind that even if you don't live on the coast or close to a river, food damage can impact you. It's a good idea to be prepared instead of waiting to be reminded by melting spring snow or heavy summer rains as there is a thirty day waiting period before the coverage can take effect.
Federal Flood Insurance Program
While the federal flood insurance program is a great place to start when looking for flood insurance, the basic policy generally provides only limited coverage. If you desire more coverage, you can find additional help through specialized insurance companies who sell "excess" flood insurance. It's available for all areas - high and low risk. Talk to your current homeowners agent about the details. If your current insurance agent cannot help, he can point you in the right direction.
For more information, visit the Federal Flood Insurance Program website.
Reference: www.iii.org
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