Free Flood Insurance Quotes: an Introduction to Flood Insurance

In the wake of so many weather related natural disasters, more people are wondering about flood insurance and whether or not it is a necessity. While most people do not actively think about flood being part of their insurance policy, when a flood does occur, they automatically assume that flood is like fire and theft and hence included in their home insurance policy.

But this is a misconception. Many policies do not include flood reparations. And what has made the problem of no insurance even more prevalent is new areas are being hit by floods that never imagined anything would happen. Historically, one knew where to expect flooding. Certain low lying towns, cities and states expected flooding after the spring thaw, they expected it after hurricanes on whose path they lived and even during regular heavy rainy seasons.

Patterns, however, have changed and floods seem to be doing more damage now even in the face of built precautions such as dams, floodways or spillways and man-made wildlife or natural habitats. Two years after the massive hurricane destruction in New Orleans, people all over the country are scared. They see how people have lost everything and how the insurance companies have refused to help with rebuilding. The whole mess is a national tragedy.

Interestingly enough, fire and flood are the most common of natural disasters, yet people do not take the time to investigate thoroughly when purchasing home insurance policies. Some areas, however, require the purchase of flood insurance if building new homes in potential flood areas. It is also common now for some mortgage companies to require mortgagers to take flood insurance in order for the mortgage holder to issue the mortgage. For homeowners that take precautions against flood, there are also reimbursements for having practices in place that avoid or limit the amount of flood damage that may be incurred.

Typically when purchasing flood insurance, the home must be insured for at least eighty percent of the replacement value. Also, unlike fire on a regular insurance policy, flood insurance has different rules and is handled in a way that one should understand before purchasing in order to avoid disappointment and financial loss in the event of having to make a claim.

  • Flood insurance is required on both the building and the contents. In fact, two separate policies are required for each of the building and the contents.
  • Fire insurance allows a payout of the stated amount in the policy. If for instance you only use $150,000 to rebuild or renovate your home after a fire but the policy is set for $160,000, you normally receive the insured value. On the other hand, flood insurance only covers you to the actual replacement value.
  • Depending on the amount of the flood insurance and the limit of liability, you may not be entitled to full replacement cost as in the case of fire. For example, if a fire destroys your home, and you have a guaranteed replacement value policy in effect, if your home costs $180,000 to rebuild but your limit of liability is only $150,000, you will still receive the required $180,000. This is not the case with flood insurance. You will only receive the $150,000 regardless of how much it costs to rebuild since this is the amount in the limit.
  • Receipts may be required for major purchases such as appliance and electronics replacement, carpeting, furniture and any other high-ticket items.
Of course, this article was only a brief introduction to flood insurance. In order to understand the concept fully and determine the proper amount required for your home and the respective deductibles, it would be best to call your individual home insurance agent to see what is available.