Flood Insurance

Do I Need Flood Insurance?

If a flood swamps your home, will insurance cover the damage? That depends on the value of your home, the amount of water damage and whether you have a flood insurance policy. 

Regular home insurance doesn’t cover flooding. You’ll need a policy offered through the government’s National Flood Insurance Program .  Also note that those top out at $350,000 in coverage for your home and its contents. For higher amounts, you may need supplemental coverage to protect your savings from taking a hit.

People tend to associate floods with a total loss, but the average flood claim for U.S. homeowners is about $39,000, according to the flood insurance program.

Many Houston residents have discovered the hard way that being in a low-risk area is no guarantee of avoiding flood damage. An analysis from the University of California-Davis Center for Watershed Sciences estimates 53 percent of the flooding from Hurricane Harvey occurred in areas deemed to have a minimal flood hazard.
"Everyone talks about a 100-year floodplain or a 500-year floodplain," says Mark Welstead, president of Rainbow International, a Neighborly Company that provides flood restoration services. "One of the challenges is if you're close by but not in the floodplain, you're still at risk."
Multiple flood insurance coverage options. Experts say there is no easy way to determine if a homeowner should buy flood insurance. In addition to their location in proximity to waterways, people should consider whether their basement is finished and what other resources they might have to respond to a flooding event. 
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Those who do decide to buy flood insurance have several options. The National Flood Insurance Program underwrites much of the flood insurance in the country. However, that program is set to expire on Sept. 30, 2017 unless Congress reauthorizes it.
Welstead cautions people not to confuse NFIP coverage with disaster relief provided through the Federal Emergency Management Agency. "The reality is FEMA might give you some assistance, but that might not cover your structure or contents," he says. Instead, homeowners need to buy a NFIP policy – available through participating insurance agents – to get money from the flood insurance program.

Still, even those who buy NFIP policies could find themselves paying out of pocket to replace a home after a flood. Flood insurance from the government will only cover up to $250,000 for damages to a residential dwelling and $100,000 for personal property lost in a flood. Coverage for contents is not automatic and is offered for a separate premium.

O'Brien says homeowners may need to use a combination of NFIP and private flood insurance to fully insure their property. While NFIP policies won't pay for temporary housing or cover loss of income, those may be options with private policies. Other plans may offer only supplemental coverage. Stillwater notes Jumpstart Recovery Solutions will soon offer flood plans intended to cover short-term out-of-pocket costs.

To make sure homeowners get the right type and level of coverage, O'Brien strongly recommends working with a trusted insurance agent or broker. "It's very, very important that you get good advice," she says. Don't wait until the weather turns bad because then it's too late. Like other forms of insurance, flood coverage must be purchased in advance. NFIP and most private policies have a 30-day exclusion period before coverage begins. "If you have a tropical storm bearing down on your address, it's too late because if it hits, it will be within the 30 day exclusion," Welstead says. 

Homeowners also need to make sure they have a plan in place, they also need to ensure they have the proper level of coverage. "The worst time to find out you're under insured is when an event happens," O'Brien says.
In addition to buying insurance, homeowners should inspect sump pumps annually and consider landscaping features that will divert water from a home. Beyond taking those precautions, the only other thing left to do is hope the next record-setting storm doesn't hit close to home.

Here are nine ways to get the best results from your insurance claim after a disaster:
Know what your policy covers. "Every insurance policy is different in regards to coverage," Aldrich says. Deductibles may not be the same for all types of claims. Does your policy pay for the actual cash value of your home and contents, or do you have replacement cost coverage, which pays the cost of buying new stuff or rebuilding your house, with some limitations? You may need to add what's called ordinance or law coverage to pay for upgrades that are required by building codes. "It's well worth paying for," Bach says. "Most of the time if you have substantial damage, there are going to be upgrades that you'll need to make."
Document your loss. That could mean providing photos or video showing the damaged items or producing a copy of a household inventory or receipts. "What a lot of people don't understand is that the burden of proof is on you, as the insured," Aldrich says. "You have to produce a document, produce an estimate."
Protect your home from further damage. If your roof is blown off or your windows are broken, the insurance company expects you to secure those openings before more damage occurs, which may not be covered. "Some companies may look at it as negligence if you don't take precautions," Worters says.
Negotiate if you don't like the initial offer. Get estimates from multiple contractors and send them to the insurance company with your request for reconsideration. "Insurance companies are relying too heavily on computer programs to estimate repair costs," Bach says. "You can expect that there will be a gap between the amount the insurance company says it will cost to make repairs and the estimates you get from local contractors."
Know that the money won't necessarily go to you. Most insurance checks are written to the company holding your mortgage, which then has to send the money to you.
Hire licensed contractors. Get at least three estimates, and check references, licenses and insurance. Never hire a contractor who says he was simply "in the neighborhood." After a disaster, reputable contractors don't need to solicit business, and those who go door to door are often unlicensed at best and scammers at worst.
Vet the contractors recommended by your insurance company. In some cases, insurance companies have a list of contractors who have agreed to do the work for what the company will pay. Ask about warranties, references, licenses and insurance. "Sometimes these people that they bring in are good and sometimes they're not," Bach says. If you don't like those contractors, you can choose your own.
Consider hiring a public adjuster. If you'd rather let someone else handle your claim, or if you feel the amount offered is inadequate, a public adjuster may be able to help. Before you hire a public adjuster, ask for references and check the adjuster out as you would any other contractor. The National Association of Public Insurance Adjusters is a good place to start. "It's very hard for the average consumer to self-advocate in these situations," Bach says. "It can be challenging to take on an insurance company because they've got armies of lawyers on their payrolls."
Beware of scams. Disasters bring scam artists and charlatans out of the woodwork. Be wary of out-of-town roofing companies and contractors who are simply stopping by to solicit your business. Remember that good contractors don't need to solicit business after a disaster.



Bill Connors

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