How much flood insurance coverage do i need? Well, if you have taken out fire and flood insurance, either on your own or as part of an overall homeowner’s policy, it is important to know exactly what such a policy covers.
Don’t be vague about what these kinds of policies-specify items you are willing to insure and circumstances in which that insurance applies.
Keep in mind that insurance companies do not want to pay on claims.
They often create various stipulations that need to be met if they will pay out on a claim. It is in your best interests to know what these stipulations and restrictions are so that you will be as well protected as you can be insurance-wise, or at least avoid surprises after some kind of disaster has occurred.
Be Prepared to Ask Questions
The best way to find out exactly what you are covered for is to ask insurance providers the right questions. These questions should be designed to be very specific about what the nature of your coverage is. The following are some of these questions and general question categories that you should take up with your insurance company representative regarding fire and flood insurance.
Get Specific about Direct Loss Coverage
Ask your insurance representative if you are covered for direct losses that are due to a number of different causes. This will help you sort out the circumstances under which you are covered and those you are not, and which policies (fire or flood) cover which. Some causes or circumstances you must inquire about include: Simple house fire, explosions, smoke damage, wind storms/tornados (i.e. that result in fire or flooding damage), arson or vandalism, burst pipes, hurricanes, flooding from river overflow in flood prone regions, and ordinary precipitation causes like extended rain or hail.
FIA Flood Insurance and Ordinary Water Damage
You should know that for the most part flood insurance is handled by the federal government. It is run by the Federal Insurance Administration and tends to be implemented only in flood prone areas. This is insurance for true flooding, and in general ordinary insurance policies do not cover it.
Homeowner’s policies that cover water damage are not, strictly speaking, the same as flood insurance. These policies often cover mishaps like burst pipes flooding a house. Some people confuse this with flood insurance and it is important to make this distinction. If you live in a flood prone area, you will want to ask the representative for your FIA insurance provider questions regarding what kind of flood damage is covered. If not, then you will only be asking about water damage coverage.
Determine how much you are insured for as regards complete home replacement. The amount that you insure a house for in the event of a total loss due to fire or flooding should be its market value less the cost of the property. Most assessments of fair market value for a house are derived from a real estate perspective factor in the value of the property. However, the land around your house typically will not need to be insured because it will still be there or will recover after fire or flood damage.
When doing your due diligence for the appropriate coverage, consider seeking comparisons for cheap home insurance. Always remember that knowledge is your biggest asset. You may want to ask your insurance representative about extended policies that cover a house for more than the rebuilding costs if you live in a flood/wind storm/fire prone area. This helps protect you against being unable to rebuild should house values fall suddenly.
Protect Your Valuables
Ask your representative what valuables are covered in the event of fire or flooding. This could include jewelry, electronic equipment, power tools, expensive cutlery, memorabilia and collectibles, paintings and sculptures, antique furniture pieces, and so forth. It is often necessary to sort this out with the insurance company if there is any question about certain categories of valuables being covered. You may wish to purchase additional “riders” to cover valuable items not covered in the standard fire or flood insurance policy.