3 Easy Steps to Decide if You Need Flood Insurance
Major flooding might be heading towards the Miami communities as Tropical Storm Blanca is forecast to rapidly grow into a major hurricane that will threaten the Eastern pacific. The Weather Channel is predicting that Blanca will be near hurricane strength Wednesday (or tomorrow!) and there is no time like the present to safeguard our future!
If you are a resident living in a high-risk flood area, most likely you have purchased flood insurance along with your homeowner insurance. For many others who live in moderate-to-low-risk areas, flood insurance is optional and can be purchased as a supplemental policy at preferred rate.
Preferred Risk Premiums are the lowest premiums offered by the National Flood Insurance Program (the NFIP), and if you don’t qualify for a Preferred Risk policy, a standard rate policy is recommended to cover the damage cost to your home and contents after flooding, which can range from $12,000 to $20,000 for a 4-inch flooding.
According to the NFIP, people outside of high-risk areas make up 25 percent of all NFIP flood insurance claims. There is a 30-day waiting period after the purchase date for your plan to take effect. So don’t wait until disaster strike to consider insurance. Start planning now to protect your investment, and decide if you should purchase flood insurance in 3 easy steps:
1. Find out if your property is at risk
Visit the NFIP website and fill out a One-Stop Flood Risk Profile. The tool runs your address and comes back with an estimate of your rate and a list of local insurance agents near you. However, the Flood Insurance Rate Map (FIRM) is constantly being revised due to geographical changes, construction activities, and meteorological events. For an accurate quote, contact an insurance agent or your community floodplain manager. A rough estimate of flooding cost can also be obtained by a calculator provided by the NFIP.
For condo owners and renters, flood insurance is also offered. Depending on several factors such as your flood zone, building’s age, or number of floors, renters can qualify for the preferred rate. If your building is located on elevated ground, or if you opt for a higher deductible (out-of-pocket payment) the premium can be lowered. If you live in a high-risk flooding zone however, wager carefully before going with a deductible that is too high to handle. Don’t make the deductible more than what you currently have in savings!
2. Understand what flood insurance covers
Not all flood insurance plans are created equal. Some only cover building damage, not contents, and always find out the maximum cap on coverage for your valuables such as original artworks.
Typically flood insurance DO NOT COVER:
- Any damage to your car
- Living expenses such as food or temporary flood shelter
- Financial losses if you are running a home business
- Currencies, precious metals, stock certificates, etc.
- Properties and belongings located OUTSIDE the building such as potted plants, hot tubs, fences
- Damage caused by moisture, mildew, or mold that could have been avoided by owner (for tips on removing mold, check out some articles on our national blog!)
- Damage to your basement. Or only covers limited damage.
3. Prepare a list of questions to ask your agent
When insurance shopping, always compare at least 2-3 premium options. Take a look at this list of helpful questions to ask your agents. Don’t hesitate to go into the specifics: whom to contact to file a claim, which restoration contractors your policy accepts, if you are expected to shell out the restoration cost upfront and how long it will take for reimbursement?
It is especially important to ask whether your policy provides Replacement Cost Value or Actual Cash Value. Replacement Cost Value means the cost for you to actually replace your item. Actual Cash Value means the value your item currently holds in the market minus depreciation. For example: your 42-inch plasma TV is damaged due to flooding. You paid $400 for the TV. The Replacement Cost Value will cover how much you have to pay in order to replace your TV (more or less than $400 depending on stock availability). Actual Cash Value will cover cost of replacement MINUS depreciation (normal wear-and-tear), so your $400 TV might only qualify for $300 of coverage because you bought it 2 years ago!
Deciding the best coverage takes time and patience. Even if you already have flood insurance, it is always a good idea to do some research and see if you are still covered for all recent purchases. For example, if you have recently replaced all your living room furniture, it might be worth it to pay the extra premium and upgrade to Replacement Cost Value. Or if it has been five years since your first date of purchase, you might want to downgrade to Actual Cash Value and get a break on the annual premium!
If you have any questions, especially about flooding restoration cost, contact 911 Restoration of Miami. We handle insurance paperwork for you, and can address any of your questions or concerns.
Stay safe and be prepared.