Let’s Talk About Flood Insurance

August 5, 2020

Every summer insurers see an abundance of flood claims. A flood can cause permanent damage to your home or business and can seriously impact your financial wellbeing. The best way to be fully prepared is to have flood insurance – which is typically separate from your standard homeowner’s or commercial policy. 

When contemplating your personal insurance needs, consider the following tips:

  • Always read your policy. Understanding what is covered, and what is not, is a critical part of being prepared for a flood or any risk to you personally.
  • Realize that National Flood Insurance Program (NFIP) coverage is capped at a certain point, which results in many homes being underinsured. NFIP insures up to $250,000 per home.
  • Consider private flood insurance instead of relying on NFIP. You can often receive more coverage, add optional coverage, and still save money when compared to NFIP.
  • Get coverage for your external structures. In policy language, these are “unattached” structures such as a detached garage, pool, or shed.
  • Consider Temporary Living Expense (TLE) coverage. This covers hotels, meals, and other expenses while your home is unlivable. 

Commercial properties typically require a special policy to cover flood losses. This is separate from the standard commercial property insurance, including a Commercial Package Policy (CPP) or a Business Owners Policy (BOP). Consider the following tips for protecting your business:

  • It is important to consider your location. If your business is near a flood zone, then it may be wise to consider flood insurance. 
  • You can only purchase flood insurance from the NFIP and some private insurers. However, in order to purchase this coverage, you must go through an insurance professional, not the federal government. 
  • Remember that there is a 30-day waiting period from the date of purchase before the policy goes into effect. In order to be adequately prepared, it is best not to wait to purchase flood insurance.
  • If you need more coverage, you can purchase what’s called Excess Insurance Coverage to rebuild properties valued above what the NFIP limits. This kind of coverage can also protect against business interruption. 

While it isn’t always possible to avoid a flood, you can be prepared for one. Check in with your insurance agent or broker to find the proper policy and coverages for your unique needs. 

Sources:

Property and Casualty 360

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