Flood insurance may not be something you are thinking about unless you live in an area at high risk for flooding. Many homeowners feel that unless they live in an area that floods often, they don't need this kind of policy. However, skipping out on a flood insurance policy can be a significant mistake. Flood insurance protects your home and belongings and allows you to get back on your feet after a flooding disaster. Here are three things that you should know about flood insurance.
Federal Versus Private Policies
The first thing that you should know about flood insurance is that you have the option of purchasing either a federal or a private policy. There are a few key differences between federal and private flood insurance policies. With federal policies backed by the National Flood Insurance Program (NFIP), you're limited to $250,000 in coverage for your dwelling and $100,000 for your personal property. Private flood insurance offers higher coverage limits and may be a better option if you have many valuables or an expensive home.
How Much It Will Cost
The cost of flood insurance is another thing that you need to know about. If you live in a flood-prone area, flood insurance is necessary and something that you will need to work into your budget. The more likely your home is to flood, the higher your premiums will be. The average cost of a federal flood insurance plan is around $700 per year. Private flood insurance policies range in price but are often costlier than federal plans since they offer higher coverage limits. Flood insurance rates will also vary depending on the state where you live.
Your Flood Risk Can Change
Another thing that you should know about flood insurance is that your flood risk can change. New developments nearby, changes in weather conditions, and other natural issues such as wildfires can increase your chances of flooding. This means that your flood risk may change over time. If this is the case, your flood insurance company may up your premiums. Changes to your flood risk also mean that you should re-evaluate your policy and make sure that it offers adequate coverage.
Flood insurance is necessary for many homeowners, and there are a few things to know about these policies. First, you have the option between federal and private flood insurance. Private policies offer higher coverage limits than federal policies. Comparing and contrasting your options is vital during your search. The cost of a policy will also vary, but it's the expense you should budget for. Finally, your flood risk can change, and your flood insurance policy should follow suit.Share