Benefits Of Homeowners Flood Insurance

Homeowners flood insurance is an insurance policy that covers the damages to one's home that are caused by flood. For the most part, basic home insurance policies don't cover flood damage, which is why homeowners flood insurance is often necessary. Depending on the policy, homeowners flood insurance will cover everything from minor leaks to major floods.

Understanding Flood Insurance - National vs. Private

Flood insurance can be divided into two types - government-run national insurance and private insurance. The former is run by National Emergency Management Agency (FEMA) through the National Flood Insurance Program (NFIP). Flood insurance can be purchased from either NFIP directly or any private insurers that are affiliated with it. FEMA is responsible for setting policy rules and underwriting loses.

National flood insurance covers communities that agree to join NFIP and adapt federally required flood management ordinances. Most of the time, those tend to be the more flood-prone communities, but that isn't always the case. The rates depend on many factors, which can include the home's age and type of construction, as well as the level of flood risk.

Private homeowners flood insurance is a fairly recent phenomenon. Because of this, only a few large insurance companies offer it. Most private policies will cover any area, and the benefits are usually more extensive compared to the ones that national flood insurance offers. However, the private homeowners flood insurance policies are considerably more expensive. Most working class and middle class families have to rely on FEMA for coverage because the private alternatives are beyond their price range.

What National Homeowners Flood Covers

National homeowners flood insurance offers two types of coverage - building coverage and possession coverage. Both are subject to maximum coverage caps. NFIP will only provide up to $125,000 worth of building coverage and up to $100,000 worth of possession coverage. The homeowner would have to cover everything else out of his or her own pocket. NFIP's flood insurance does not cover the damage to the property the building sits on or any other detached structures located upon it.

Building coverage includes:

·     The building itself, including the foundation

·     Electrical and plumbing systems

·     Central air conditioning equipment, furnaces and water heaters

·     Refrigerators, cooking stoves and any appliances built into the building structure

·     Permanently installed carpeting

The possession coverage covers property that the homeowner keeps inside the house. This includes:

·     Clothing, furniture and electronic equipment

·     Portable air conditioners, microwave ovens and dishwashers

·     Clothing washers and driers.

·     Carpeting that isn't permanently installed

What Private Flood Insurance Covers

In addition to providing building and possession coverage, private homeowners flood insurance policies usually cover other flood related expanses, including the costs of food and hotel stay while the home is being repaired.  Oftentimes, private homeowners flood insurance policies are used to cover anything national flood insurance doesn't cover. In fact, many companies that sell national insurance also offer private flood insurance.

In most cases, insurance providers will only offer private insurance to homeowners that already have their homeowners insurance policy.

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