Plan for the risk of flooding before it's too late

Posted: June 29, 2009

Chad M. Olson-American Family Insurance

8330 N. Teutonia Ave # 203

Brown Deer, WI 53209

414-434-0300

 

Plan for the risk of flooding before it’s too late

 

Water is an essential part of our lives, but it also can cause headaches when it comes in the form of a flood. Aside from the obvious inconvenience factor, flooding can inflict severe financial damage and even render some homes unlivable. Flood insurance can help temper your risk, but it’s important to understand its terms and conditions.

 

You might think that you are at greater risk from fire than flooding. Not so. The fact is, property losses from flooding are 30 percent more than losses from fire. Homeowners are also four times more likely to suffer a loss because of a flood than a fire. On average, U.S. consumers lose about $2.4 million dollars in goods every year from flood damage.

 

Federal aid may be available in areas defined by the government as federal disaster areas. Often times, however, that aid is in the form of a loan that must eventually be repaid. What’s more, fewer than 10 percent of all natural disasters qualify for that assistance.

 

So that leaves your homeowners policy to save the day, right? Not necessarily. Contrary to popular belief, damage from flooding is very often not covered under your homeowners or renters policy. Instead, flood insurance may be purchased from your insurance agent through the federally backed National Flood Insurance Program (NFIP), which contracts with insurance companies to sell and service its policies.

 

To qualify for the NFIP program, property owners must live in a community that participates in the program. The federal government requires flood insurance as a part of mortgages for houses in flood-prone areas. You might be eligible for a reduced rate if the community you live in has agreed to certain zoning regulations.

 

One important thing to remember is to plan ahead. Running out to purchase insurance the week before a big storm is forecast won’t help you, as there is a 30-day period before the policy takes effect.

 

In addition to insurance, you can also take simple steps to help minimize your risk for large losses, like moving electronics and valuables to higher areas of the house. Also, if you need flood insurance in excess of the NFIP’s limits of $250,000 for residential coverage and $500,000 for commercial coverage, ask your insurance agent about specialized policies to provide excess coverage.