Flood insurance

You are staying in a city located a great distance away from any water body. You do not feel the reason to spend greenbacks on paying premiums for flood insurance. After all, when there is no water body nearby, how can the city become flooded, right? Wrong. You forgot another source of water: rains. Supposing your city receives really heavy downpours from the skies. It is the heaviest rainfall that the city has ever got till now. The drainage system just cannot withstand the onslaught, and in no time at all the roads are covered with water. As the downpour continues, the water level slowly rises and inevitably starts entering your home. You and your family members have to be hurriedly evacuated, leaving behind all your worldly possessions. After the heavens have calmed down, you return to survey the disaster , your house is a wreck, with practically everything inside ruined by water seepage. Emotionally you feel like a wreck, too. You have not only lost your home and its contents, but are financially unable to recover and start again ? all because you did not take flood insurance.

So what ? there is only a very slim chance of this scenario occurring.

Do I really have to take flood insurance? " Yes "
why take the risk? That slim chance is a very real possibility, given the fact that global warming is taking place at a rapid pace and is subsequently causing dramatic climatic changes around the world. Further, with the hectic pace at which shopping complexes, office towers and other concrete structures are being constructed, there is a heavy strain on the land itself. During a flood, it just cannot take in so much water at one go. Hence, damages can be huge.

? Also, it is the law that you MUST take flood insurance if you reside in a Special Flood Hazard Area (SFHA). You need to find out if your community is one of those that come in the category of a dangerous flood zone, as stated by the Federal Emergency Management Agency (FEMA).

What are the Flood Zone Categories?

There are 4 Zones, as per FEMA:

"V" Zone: This zone includes those areas that have the highest possibility of getting flooded (such as property on a beachfront) and are thus categorized as being the most hazardous.

" A" Zone: This zone includes those areas that can be flooded due to their location near a body of water (such as a lake).

"X Zone: This zone includes those areas that have a very small possibility (minimum hazard) of getting flooded.

Note: This category has replaced the earlier "B" and "Y" categories

"D" Zone: This zone includes those areas that have not been considered as potential flood-affected areas and have not been surveyed in detail. However, the possibility of an area in this category getting flooded should not be overlooked.

If your home is in the "V" or "A" zone, you have to apply for a flood insurance policy.

So what exactly is the meaning of Flood Insurance?

Flood insurance, simply put, means obtaining cover for your property to offset the losses when the property is flooded.

What does Flood Insurance cover?

The losses incurred during flooding include not only damage to the structure and flooring of your house, but also to the air conditioner, water heater, and furnace equipments. You can also obtain cover for your valuable stamp collection, expensive jewelry, all the furniture pieces, and other items in your home. Furthermore, the policy will also cover for expenses towards cleaning up the debris after the flood damage.

How much Flood Insurance cover can I take?

If you are the owner of your house:

Your home up to $250,000

Items in your home up to $100,000

If you are staying on rent:

Your possessions up to $100,000

If you are the owner but are not staying there:

Your property + the contents up to $500,000

[Reference: floodsmart.gov]

Important Points to Remember

Your standard homeowner?s policy will not cover losses caused by flooding.

Before buying any new property, check with your real estate agent the FEMA-categorized zone that it comes under and what are the risks involved in terms of flooding.

Your community must be a participant of the National Flood Insurance Program (NFIP). Otherwise, you are not eligible to apply for a flood insurance policy.

The sooner you apply the better, as it takes 30 days for your policy to become effective from the date of your purchase.

There are 3 forms of flood insurance policies. You can buy a policy for your home (this is a policy for a dwelling), your office (this is a policy for a general property) or your condominium (this comes under the residential condominium building association policy).

Supposing you have taken precautionary measures to prevent damage to your house from flooding, such as installing a sort of fortification from logs of wood around the property. The money you spent on installing this structure will be reimbursed to you under the policy (up to a certain amount, of course!).

Find out if the flood insurance policy will cover losses caused by damage due to the strong winds that sometimes accompany heavy rains or storm.

Let's suppose you own two properties. You need to find out before you apply whether both the properties will be covered by the policy. Most likely not ? you will probably need to purchase separate flood insurance policies for each of the properties.

Don\'t wait till you are, literally and metaphorically, over your head in deep waters. A flood insurance policy is a great buffer to all the losses that are incurred during a flood. AND just think: it could cost less than $250 per year (naturally much more depending on your home's location and what you want covered). As the author of this article is no insurance expert, do consult a professional in this field for sensible advice.

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