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Home's insurance may not cover a flood

Jan. 31, 2013 - 01:06PM   |   Last Updated: Jan. 31, 2013 - 01:06PM  |  
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At www.floodsmart.gov, FEMA provides extensive information about flood insurance, as well as a tool that lets you enter your address and find out whether the property is in a high-risk or low- to moderate-risk area. It provides an estimated range of premium costs and lists area agents who sell flood insurance. You can also call customer service representatives at 888-379-9531.

Homeowners may assume their homeowners' insurance policy covers flood damage. They are wrong.

Renters may assume their belongings are covered by their landlord's insurance in a flood. Maybe, maybe not; they'd need to check with their landlord about that — and ask to see the policy.

Either way, if you wait until the forecast is all about heavy storms in your area, you've waited too long to buy flood insurance: There's a 30-day waiting period before coverage takes effect.

Corise Morrison, executive director of USAA's residual market underwriting, has seen it happen.

"It's a tragic situation," she said. "Everyone really needs to consider flood insurance."

She said just about everyone basically lives in a flood zone — the only question is whether it's a high- or low-risk zone.

Flood insurance is available in most communities through the National Flood Insurance Program, run by the Federal Emergency Management Agency.

In areas designated by FEMA as high risk, all home and business owners must buy flood insurance if they have mortgages from federally regulated or insured lenders.

If you're in a moderate- to low-risk area, flood insurance is still recommended, although not required. NFIP data show these areas submit more than 20 percent of the NFIP claims and receive one-third of disaster assistance for flooding.

"Consider buying a flood insurance policy if your house could be flooded by melting snow, an overflowing creek or pond, or water running down a steep hill," said Loretta Worters, vice president of the Insurance Information Institute.

Flooding can come from poor drainage systems, rapid accumulation of snow or rain, and broken water mains.

Some people mistakenly think that if their community has no history of flooding, flood insurance is unnecessary, said USAA's Morrison. "Just because they haven't seen it before in the area doesn't mean they won't see it in the future," she said.

Flooding problems caused by something within a house, such as overflow from a washing machine, usually are covered by the homeowners' policy.

The NFIP provides replacement-cost coverage for up to $250,000 for the structure of a home, and up to $100,000 for actual cash value of personal possessions. Depreciation is factored in, so generally the older an item is, the lower the reimbursement.

Premiums can be as low as $49 a year for contents-only coverage for renters in low- to moderate-risk areas and as low as $129 a year for coverage of both the contents and the building in these areas.

Premiums and rules of the program are regulated by the NFIP, so they don't vary among participating companies. Worters said extra flood insurance is also available from some private insurers for those who need more coverage over the basic policy, or whose community does not participate in the NFIP.

Insurance can be purchased from specialized companies through independent insurance agents or from regular homeowner insurance companies that have arrangements with specialized companies to provide coverage.

Communities participating in the NFIP agree to adopt and enforce regulations that meet or exceed FEMA requirements to reduce the risk of flooding.

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