Common Misconceptions about Flood Insurance

Flood insurance carries several misconceptions because many people do not fully understand flood insurance and how it works. Here are a few common problem areas with flood insurance:

Homeowners Insurance Does Not Cover Floods

Most people believe that their normal homeowner’s policy covers against flooding. In the majority of cases, this simply is not true. If the flood comes from something inside the house like a broken water line it would be covered. However, a flood would not be covered if it comes from outside the home. This misconception has left many homeowners helpless after a flood. Flood insurance requires a separate policy that is especially for floods. If you do not have one, you are not covered.

Outside the Flood Plain

Many people mistakenly believe that their house cannot be flooded because they are not inside a traditional flood zone. Each year, 25% of the flood losses that occur are to houses outside flood zones. Just because you have never seen it flood near your house before, does not mean it cannot happen to you.

If you live in an area that is prone to flood, you will be required to have a flood policy, so you will be protected. Flood zone areas have a 26% chance of flooding at some point over the course of a traditional 30 year mortgage.

Waiting Until the Last Minute

Many new homeowners think that they can wait until the last possible minute to buy flood insurance. With modern weather technology, we know when a hurricane will hit a coastal area. However, insurance companies require that, during hurricane season, flood insurance has a 30 day waiting period. From the time you purchase the policy, the house is not covered until a month later. If your house is destroyed within that 30 day period, you must cover the expenses on your own.

Relying on the Government

Many people believe that the government will step with assistance for flood victims and provide disaster relief. While this is true, the amount of money that you receive will be small in comparison to what you need. In addition, disasters are only declared in half of the floods that occur in the United States. Leaving your financial future up to a 50% chance.

Alternative Flood Insurance

Many think that they cannot buy flood insurance because they do not own their home. In reality, there are flood policies available for apartments, condos, commercial buildings and many other types of structures.

The damage costs can add up quickly when everything you own is destroyed in a flood. Most people do not have enough money in savings to buy everything they need to live again, after a flood. It is much better to pay a small premium for flood insurance than to be caught without a home or possessions after a flood.

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