Did you know that each year floods cause approximately eight billion dollars worth of damage in the United States? The problem is so serious that the Federal Emergency Management Agency (or FEMA) now offers flood insurance to people living in at-risk communities.
But, is this type of government flood insurance enough? What are the pros and cons that come with it? And, are there any other options? If you want to learn the answer to these questions, and more, then you’re in the right place.
In this article, we’ll teach you everything you need to know about the different types of flood insurances. Let’s get started!
What is the National Flood Insurance Program?
The National Flood Insurance Program, or NFIP, is government flood insurance that’s offered by the Federal Emergency Management Agency. The insurance itself is underwritten by the federal government.
That means that you can purchase it through most types of insurance agents. There are two types of coverage that come with the NFIP. The first is coverage that applies to the building itself (which is limited to $250,000).
The second is coverage that applies to the contents of the building (which is limited to $100,000). You can purchase one of these types of coverages, or both, depending on your needs.
For a while, it was required for people living in high-risk areas to have a plan with the NFIP. However, these days it’s all right for the coverage to come from a private insurer, as long as it covers the value of the house.
What is Covered By the Program?
Most people living in low to moderate risk areas pay roughly $400 a year for their FEMA coverage. People living in high-risk areas will likely need to pay $700 or more for their coverage.
So, what is covered by this cost? First, all essential systems in the house. This includes things like HVAC systems, sump pumps, cisterns, fuel tanks, solar systems, and water tanks. Next, appliances like:
- Refrigerators
- Stoves
- Dishwashers
- Dryers
- Washers
- Freezers
- Portable air conditioners
Your policy also covers any permanently installed carpets and window treatments. This coverage also extends to any bookcases, cabinets, paneling, and wallboards that are permanently installed.
However, the policy only covers the ones that were physically damaged. In terms of permanent structures, the FEMA plans cover walls, staircases attached to the structure, anchorage systems, and garages (both attached and detached).
However, you can only put 10% of your coverage toward your garage. Finally, the policy also covers personal property like electronic equipment, furniture, and certain other valuables. However, this only applies if they aren’t stored in the basement.
What is Not Covered By the Program?
Sadly, there are a lot of exclusions in the NFIP. First, the program doesn’t cover mildew, mold, or moisture damage that’s the fault of the homeowner.
Damage caused by moving earth also isn’t covered (this is true even when the earth damage itself was caused by the flood). You’re also out of luck on any personal property found outside the house.
Some examples include plants, hot tubs, pools, decks, walls, fences, septic systems, and well systems. There are other exclusions on your personal property too. For example, any currency, valuable certificates, precious metals aren’t covered.
The same goes for your car and its parts. The program also doesn’t cover practical things like:
- Living expenses while the building is repaired
- Any financial losses that result in businesses stalling
- Loss of access to the property that’s insured
What Are Your Alternatives?
If you aren’t convinced of the coverage provided by the NFIP, then you aren’t alone. An increasing number of homeowners are getting fed up with the high rates, application difficulties, and coverage gaps.
If you fall in this category, then what are your other options? The good news is that there are a small number of private insurance providers that offer flood coverage.
There are a lot of reasons why you should consider this alternative, which we’ll go over in the next section. However, make sure that you choose the best private flood insurance provider possible. Otherwise, you’ll likely be left high and dry when a flood hits.
Why Should You Consider Private Flood Insurance?
There’s a lot of reasons why you should consider private flood insurance. First, private insurance offers higher coverage limits. That means that you get more comprehensive coverage during a flood.
Plus, you can get full coverage on your replacement personal items. If you go with the NFIp, then they only cover the amount that is depreciated. Private coverage, on the other hand, provides you with full replacement cost.
You’re also not going to wait as long. Most of these private insurers come with a waiting period of ten days. That’s a lot less than the thirty days offered by the NFIP. And, this can mean all the difference when flood season rolls around.
Finally, in many cases, private insurance is more affordable. Ultimately, this depends on the specific provider that you go with. However, many homeowners end up saving between 20% to 50% on their policies.
So, that means you end up getting more coverage at a fraction of the cost. As you can see, there are a lot of reasons to contact a private insurance agent to see what they can offer you.
Enjoy Learning About Government Flood Insurance? Keep Reading
We hope this article helped you decide whether or not government flood insurance is enough. While FEMA has made some improvements to the NFIP, it’s important to remember that the coverage is still limited, and often difficult to apply for.
As such, we recommend that you fully explore your options with private flood insurance before you commit to it. Did you enjoy this article? If the answer is yes, then you’re in the right place. Keep exploring to find more topics that you’re sure to love.
