flooded neighborhood after a hurricane

What Is Flood Insurance and How Does it Cover Hurricanes?

When a natural disaster strikes, most people think about their homes. The bill to repair or rebuild your house may be steep, but what about all that stuff inside? What if you can’t afford to replace it? It’s often overlooked, but flood insurance is an important type of coverage that can protect your home and other valuables from the ravages of nature. Flooding might not seem like a threat in many places, but as we continue to see more natural disasters, even small streams have the potential to overflow and wreak havoc on your property. There are two main types of policies for protecting your home from floodwaters: flood insurance and flood-proofing. Flood insurance is not standard with home insurance policies because it covers floods that are typically not covered by other policies. This article explains what you need to know about flood insurance and how it covers hurricanes to give you peace of mind during storm season.

What Is Flood Insurance?
A flood insurance policy is a type of coverage that protects your property from flooding. Flood insurance is different from traditional homeowners’ insurance, which doesn’t normally cover flooding. Flood insurance is a federal program administered by the National Flood Insurance Program (NFIP). The NFIP was created to provide affordable flood insurance to homeowners living in areas at risk of flooding. Flood insurance is mandatory if you live in a flood-risk area, and you have a federally guaranteed mortgage. When a flood occurs, the federal government pays out claims against the NFIP. You don’t have to worry about defending your claim or filing a lawsuit against the insurance company. You don’t even have to be present during the cleanup. The flood insurance policy covers the cost of repairing or rebuilding your home.

How Does Flood Insurance Cover Hurricanes?
The National Flood Insurance Program (NFIP) offers policies that provide protection from flood damage. And these policies can be purchased by anyone, no matter where they live. The program is intended to be self-sustaining and is funded by the premiums paid by policyholders along with interest and investment income. Most people think about flood insurance when heavy rains are predicted, or a river has risen to flood stage. But even small streams have the potential to overflow and cause damage. And in some places, hurricanes or tornadoes can cause flooding. In the event of a flood, a flood insurance policy will help to cover the cost of repairing or replacing your home and its contents. A flood insurance policy is separate from your homeowner’s or renter’s insurance policy. You should have both to protect your assets and be prepared for the unexpected.

Types of Flood Insurance Coverage
There are two types of flood insurance coverage: flood insurance and flood-risk reduction. 

    This coverage is mandatory for people living in designated flood zones. It’s usually purchased by homeowners or renters who have federally backed mortgages. 
    This is optional coverage designed to reduce the risk of flooding to your home. It’s often used in addition to flood insurance to protect against very high-risk floods. While flood insurance policies are only available for federally designated “Special Flood Hazard Areas,” this coverage can be bought anywhere. Some people decide to forgo flood insurance because they wrongly assume that their regular homeowner’s insurance policy will cover flooding damage. But homeowners’ insurance doesn’t cover flooding, which is usually considered an “act of nature.” Your policy may cover damage caused by heavy rains or flash floods, but not flooding caused by rising water.

Is Flood Insurance the Same as Disaster Relief?
No. Flood insurance is not disaster relief. It’s insurance. Flood insurance pays for repairs to your property. Disaster relief is financial assistance given by the federal government after a natural disaster. Flood insurance isn’t the same as disaster relief because: 

  • Flood insurance is something you can buy. Disaster relief is something you apply for after a natural disaster. 
  • Flood insurance premiums go into a fund that pays claims. Disaster relief money comes from taxpayers. 
  • Flood insurance is mandatory for people in flood-risk areas. Disaster relief is not.
  • Flood insurance payouts are based on the cost of repairing your home. Disaster relief payouts are based on your household income. Flood insurance is designed to protect you from financial loss resulting from a flood. If you live in a high-risk area, you should definitely have a flood insurance policy.

Why Doesn’t Everyone Have Flood Insurance?
People tend to think about flood insurance when they are already in a flood zone and their house is already damaged or destroyed. This is a mistake. Floods, hurricanes, and tornadoes don’t happen at predictable times or places. Most insurance companies require you to purchase flood insurance if you live in a designated flood zone. But even if you aren’t required to have flood insurance, it’s still a good idea. Floods cost the federal government $50 billion in damages between 1968 and 2008. And the cost of flood insurance coverage is low. You can get a quote for flood insurance coverage online and compare rates from multiple providers at once.

Bottom line
Floods are the second most common natural disaster in the United States. One in three American households is at risk of flooding. But many homeowners don’t have the proper coverage in place. If you live in a flood zone, you should definitely have a flood insurance policy. Flood insurance is mandatory if you have a federally backed mortgage and you live in a flood zone. Flooding can happen anytime, and, in many cases, even small streams have the potential to overflow and cause damage.

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