Introduction
Floods are one of the natural disasters that could occur at any place and time. Sadly, flood damage cannot be covered by normal home insurance; therefore, to be shielded a homeowners has to purchase a special flood insurance policy.
Homeowners are putting their heads in the sand about an important product most of the time, which is flood insurance. In this article, a reader is going to learn about flood insurance and why one does not just simply dismiss it.
Floods are Common and Costly
The damages of floods are often underestimated. One must realise that floods occur in areas not only close to the ground level but also in any region where water accumulates. The necessary losses are nearly impossible to reduce for all types of floods: flash, river, and coastal floods.
Federal Emergency Management Agency (FEMA) which oversees the NFIP informs that building located in A zones, or areas that are prone to high risk floods, stand a 26% chance of being flooded during the life cycle of a standard, 30-year mortgage.
Furthermore, it takes only one inch of water in a 1,000 square foot home and can amount to $10,000 dollars in damages. Some of the uncomfortable positions that homeowners can be placed, include huge losses in case of floods, failure to take flood insurance seriously.
Compensations supported by the government and economical plans
Another reason why many homeowners do not like to get a flood insurance is because of the high price. However, thanks to subsidies and low-cost products, flood coverage does not necessarily have to be costly. The FEMA’s NFIP insures policy holders in participating communities which account for well over 90% of the population of the United States at discounted rates. Also, the FEMA adopts discounted premiums by offering special low rates to structures in special flood hazard areas to encourage occupants to acquire the flood insurance.
Possible Financial Outcomes
Not having flood insurance leads to a huge loss because money has to be paid from the pocket. Often it is not included in your normal home insurance or any other types of insurance you have. As such, damages, and if not so, reconstruction cost of your house, replacement of lost valuable property, necessary living expenses during the repair work will be solely borne out of your pocket. Furthermore, it means you cannot recover your losses resulting in a reduction of your property value, let alone have a plan to manage floods.
Legal and Compliance Issues
In some areas it is not only recommended, but required, that homeowners purchase flood insurance. The federal Flood Disaster Protection Act mandates that mortgage lenders build the requirement of flood insurance of any premises located in a special flood hazard area into the loans that they make.
Noncompliance of these requirements leads to penalties, cancellation of mortgage and foreclosure. Failing to consider flood insurance is not only a serious financial mistake but also the legal and compliance one.
Peace of Mind and Protection
Finally, a storm or flood cover is obtained as a result of participating in this financial plan. To have a peace of mind and the means which will efficiently protect you and your family from further financial risk connected with flooding is something what can provide security and a chance to think more about other aspects of life.
Flood insurance is a vital safeguard and coverage within a flood insurance policy can include: Structure – that is your home, contents which is your belonging and expenses if you need to live elsewhere due to flood.
Conclusion
Flood insurance is very crucial for home owners and it is something that they should definitely not overlook. Despite the fact that floods are oten seen as low threat, they are liable to claim a lot of money for properties and are an economic loss for those who do not have flood insurance.
This way, using government subsidies, affordable flood options, and knowing that they are covered, risks connected with floods can be limited by homeowners. To sum it up let me say that flood insurance is a relatively small cost that pays huge dividend in protecting your home and your wallet.