When to Buy Flood Insurance
Like almost everybody else who saw them, the images of flooded homes and in Houston after Hurricane Harvey is probably indelibly imprinted in your mind. If those images did anything at all, it was to remind us that water is capable of doing some very serious damage!
The Federal Emergency Management Agency (FEMA) cites water damage from floods as one of the most common and costly hazards in the U.S. Statistics by the NFIP (National Flood Insurance Program) indicate that in the course of a 30-year old mortgage period there is a 1 in 4 chance of damage caused by water in high-risk areas. Unfortunately, many home and business owners suffer those losses because flood damage is not covered by typical insurance, and they never bother to get federal flood insurance.
Home Insurance policy
Home insurance policies cover repair and rebuilding your home for damage caused by such perils as lightning, hail, fire, hurricane, hail, lightning or other disasters listed in your policy. But they do not cover damage caused by flooding.
A separate flood policy must be purchased through the federal government’s National Flood Insurance Program (NFIP, with the assistance of a local insurance agent. This policy does not target only homes in high-risk arrears. Even places designated as moderate and low risk areas are prone to experience floods or flash floods in this era of climate change. In fact, the NFIP estimates that more than 20% of the insurance claims it has handled in the past five years come from regions not designated as high-risk areas.
However, according to a recent poll conducted by Insurance Information Institute, a whopping 88% of US homeowners do not have flood insurance. The reasons range from the fact that many homeowners live in the mistaken belief that their home insurance policy protects them against flooding, to the fact that many are betting that their homes will not be hit by floods.
When to Buy Flood Insurance
So, when is the right time to purchase flood insurance? This is an important question because timing is critical, especially because of the nature of the policy. Flood insurance policy has a waiting period clause. This means that after you have purchased the insurance, the policy does not take effect immediately after the payment of premium. The waiting period clause mandates a waiting or incubation period of 30 days for the policy to kick in.
In most regions, the time or season when floods are likely to strike are generally known, and it would be prudent for homeowners to purchase the policy months ahead of the expected time of the floods to ensure they reap the benefits of the insurance cover when the floods strike. Do not wait until the rainy season to purchase your flood policy. And similarly, don’t expect to be able to buy insurance after the weather forecast predicts that a big storm headed your way. If you wait too long, you could find yourself trapped in an awkward situation of having purchased insurance but ineligible for coverage if flood damage does occur within a month.
Once you get your policy in place at the right time, you can feel more relaxed knowing your home, personal belongings or both are covered. Your policy will also cover losses resulting directly from flooding or flood-related erosion, but it will not cover things like:
- Damage caused by mold, moisture or mildew, which could have been avoided by the homeowner
- Paper valuables like stock certificates, currency and precious metals.
- Living expenses occasioned by relocation to temporary housing, if flood damage makes your home uninhabitable.
- Outdoor items such as patios, landscaping, septic systems, pools, hot tubs, decks and fences.
- Motor vehicles
Flood insurance also offers limited or no coverage to below-ground rooms like basements, crawl spaces and their contents.
With this in mind, don’t put yourself at the mercy of Mother Nature, believing that you cannot be affected by floods. Get coverage on time; the earlier, the better.
