About 20,000 communities have agreed to tighter zoning and building measures to control floods, reports FEMA (Federal Emergency Management Agency). This is due to the fact that flooding is the most prevalent natural disaster and the basic home owner's insurance policy does not cover flooding.
The biggest investment most Americans would have is their home, so isn't it wisdom to protect that investment? Home owner's insurance policy is a compulsory requirement before mortgagors would consider your application and the insurance amount must at least cover the loan. But that is not enough; if you live in an area that is prone to floods then you need to get a separate cover for flood.
The location of your home determines whether you are insurable. Most beach front or ocean side homes (especially those that are in areas that are prone to hurricanes) are considered uninsurable. So you have to bear this in mind as you seek to purchase that beautiful home by the sea side or beach front.
Most communities are now involved in NFIP (National flood Insurance Policy). This makes it easier for residents in that community to buy flood insurance. So check in your community and find out whether they have such plans.
Sometimes flood victims who do not have flood insurance can receive federal aid. But this is a loan that is payable with interest and this happens only if the President declares them a national disaster.
The interest on this loan is about 4% and at the end of the day you pay more than if you had bought a flood insurance policy.
According to NFIP a loan of $50,000 would require monthly payments of $240 which is $2,880 per year for 30 years. Whereas your $100,000 flood insurance premium is $33 a month which is $500 per year.
So considering the above, the best thing for you to do is to buy a flood insurance policy. Bear in mind that there is awaiting period for every insurance policy, so do not wait until there is warning of a disaster before running off to buy one.
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Chisomeje Odimba writes for Quality-Insurance-4-Less.
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