Normally, you will have some level of disaster protection through your homeowners insurance. However, check the fine print - you usually have to add insurance coverage for flood insurance.
We have to remember that insurance companies are always stacking the odds in their favor. As risk goes up to them, the price of the insurance coverage will increase. It's that simple. If you want flood insurance coverage, you likely live in a place that gets floods, right? Therefore, you can expect flood insurance coverage to be expensive.
The key factor in getting any kind of natural disaster coverage is whether your area is prone to that kind of disaster.
This brings us to the topic of flood insurance. In many parts of the country (especially hurricane-prone areas) flood insurance is critical.
The average US flood insurance premium in 2003 was $416 a year. The average amount of flood insurance purchased for an individual property in 2003 was $151,489. Given the kinds of claims that are made when properties are damaged by flood, the costs of premiums are very reasonable, although the recent challenges with hurricanes in the south are likely to drive the cost of insurance up. The number of claims in 2004 should be expected to be unusually high because of the unusual number and ferocity of the hurricanes in 2004.
If you need flood insurance, you should be aware of the different kinds of policies. Flood insurance policies are generally available in three forms: "Dwelling" (most homes), "General Property" (apartments and businesses) and "Residential Condominium Building Association Policy" (condominiums). All of these policies will have limit's on coverage.
The big questions on most peoples minds are what type of policy I should buy and how much coverage do I need? The Federal Emergency Management Agency (FEMA), which oversees the National Flood Insurance Program, can answer many questions about flood insurance as well as flood zones, on it's website. If you need to find out more about the details of flood insurance policies directly, go to the website for the National Flood Insurance Program (NFIP). Between these two sites, you should be able to get answers to most of your common questions, including:
- Details about flood insurance coverage
- Coverage and premium costs
When buying flood insurance, keep in mind that most policies will not take effect until 30 days after you purchase flood insurance. So, if the weather forecast announces a flood alert for your area and you run to purchase coverage, it's already too late. You will not be insured if you buy a policy a few days before a flood.
FEMA officials say the national flood program works best for everyone when more people participate. This lowers rates, increases the pool of funds from which to draw in the event of a flood and lessens the chance that claim payments will have to taken from taxpayer funds. To see if your community participates in NFIP, check FEMA's Community Status Book.