Flooding presents a variety of risks to homeowners. Other than the inconvenience of cleaning a flooded property, floods could also damage interior fixtures, foundations, walls, and drainage systems. A homeowners' insurance policy does not cover losses incurred through floods. Ordinarily, the federal government regulates the administration of flood insurance. Here are the critical insights about flood insurance that homeowners should know. 

What is Flood Insurance? 

Flood insurance falls under property insurance. The insurance policy covers losses suffered during a flood. Usually, floods occur from unavoidable natural hazards rarely caused by humans. Thus, most home insurance covers exclude flood damage since it is considered an act of God. As a result, one has to get a supplemental insurance policy for flood disasters.

Flood insurance policies offer protection against damages caused by the following hazards:

• High rainfall
• Coastal storms such as hurricanes
• Melting snow
• Dam failure
• Blocked drainage systems

How does Flood Insurance Work? 

Flood insurance works like any other insurance policy. The insurance company conducts a risk assessment to determine the premium payable. The homeowner pays annual premiums and deductibles based on the risk levels. In a flood incident, the insurance company assesses the damages to the property and contents. Then, the homeowner receives an amount of cash to cater for repairs, rebuilding, and replacements depending on the policy claim limit. 

Key Features of Flood Insurance

The following are key features that distinguish flood insurance from other types of insurance policies.

Separate cover

A flood insurance policy operates as a separate cover to homeowners insurance. Thus, the policyholder maintains homeowners insurance for buildings and contents. 

Cover items

Ordinarily, the insurance covers the building, foundation, finishing, electrical and plumbing systems, and house contents. Notably, flood insurance is a requirement for mortgage applications in areas designated as flood-prone areas.

Cover limits

Typically, flood insurance policies have a coverage limit of $250,000 for the building and $100,000 for the building contents. However, a policyholder may seek additional coverage. 

Regulation

The National Flood Insurance Program (NFIP) run by the Federal Emergency Management Agency (FEMA), regulates flood insurance. FEMA plays a critical role in updating flood zone maps. Generally, the cost of flood insurance partly depends on the zone location. Zone A and V are high-risk areas compared to zone B, C, and X, while D means there is no determination. Notably, NFIP regulates the pricing mechanism for all flood insurance policies across the private insurers.

Conclusively, a flood insurance policy offers protection for your home and properties, especially if you live in a flooding zone. Engage a professional insurer and get a separate flood insurance policy to be fully protected.