Do you Need Flood Insurance?

Floods wreak havoc on thousands of homeowners, renters and businesses every year.

These natural disasters can arise from many conditions, including heavy or prolonged precipitation, rapid melting of snow and ice, overflowing bodies of water and infrastructural issues, such as broken dams or levees. Furthermore, even a small amount of floodwater entering a property could cause catastrophic damages and subsequent financial losses. With these things in mind, flood insurance can be a potentially invaluable investment; however, this coverage can be nuanced and complicated.

What Is Flood Insurance?

Flood insurance is a specialized type of property coverage that owners of both residential and commercial properties often need. Standard homeowners, renters and commercial property insurance policies typically do not list floods as a covered peril, meaning those who do not take necessary steps to augment their coverage portfolios may be at risk of significant out-of-pocket losses.

How Does Flood Insurance Work?

Like many types of insurance, a flood insurance policy establishes a contractual agreement between a policyholder and their insurer. Contributing regular (e.g., monthly or annual) premiums retains residents or businesses with the right to file a claim following flood-related losses. If approved, they may receive a payout, helping them repair or replace their damaged property while limiting out-of-pocket losses.

What’s Covered?

Flood insurance typically provides two-pronged coverage, including the following components:

Structures coverage—This part of flood insurance can provide essential financial protection for a property owner’s buildings, including foundations, roofs, walls and attached fixtures.

Contents coverage—This component of a flood insurance policy may help homeowners, renters and businesses recoup losses involving their possessions, such as electronics and furniture.

How to Get Coverage?

Flood insurance was primarily purchased through the Federal Emergency Management Agency’s National Flood Insurance Program for many years. However, as flood risk forecasting has evolved in recent years, more private insurers have entered the market. By working with a qualified insurance professional, such as those at Academy Insurance Agency, aspiring policyholders can explore their options and ensure they have coverage suitable to their unique needs.

Who Needs Flood Insurance?

Flood insurance may be essential to an individual or business’s loss control measures. Coverage is generally required for those in high-risk flood areas who have government-backed mortgages. Some mortgage lenders may also require coverage for those in lower-risk areas. Property owners in high-risk flood areas who’ve received federal disaster assistance may be required to have flood insurance as a condition of future aid consideration.

Regardless of official mandates, appropriate coverage is advisable for those who live in areas prone to severe weather or floods, including those along the Atlantic Coast who may need to manage the impacts of hurricanes and tropical storms.