Flooding can happen in any location at any time. Even though many people associate floods with coastal properties, flooding can take place inland as well. That is why you always need to take a look at the map to figure out whether your property is located in a flood zone. There are some situations where your lender might require you to purchase flood insurance. What do you need to know?
What Is Protected And What Is Not?
When you purchase flood insurance, there are three broad components that you should examine. You need to check and see whether the policy covers the building, the contents of your home, and potential replacement expenses. Flood insurance policies generally insure any physical damage done to your house as well as any belongings you have inside your home. This might include your walls, household appliances, plumbing system, electrical system, clothing, and furniture.
On the other hand, most flood insurance policies do not cover your outdoor structures. For example, they will not protect your patio, swimming pool, fence, or vehicles parked outside the home.
What Is Your Flood Risk Level?
Your flood insurance premium will vary depending on where you are located. For example, if you are in a flood zone, your flood insurance premiums will probably be significantly higher; however, a significant percentage of flood claims occur in areas that are not located in a flood plain. While your premium should be lower, you may want to talk to your real estate agent to see whether it is worth it to purchase flood insurance.
Is Flood Insurance Required?
Flood insurance has its limitations, just like any other insurance policy. Therefore, you might be wondering whether it is required.
If it is required, it would be required by your lender. If your house is located in a flood zone, there is a significant chance that your lender will require you to purchase flood insurance as a requirement for financing. If you refuse to purchase flood insurance, then your lender might refuse to finance your property. You should always compare flood insurance premiums across different companies before you decide which one to go with. Be sure to compare policy coverage options and limitations as well.
Those who are taking out a loan for a home will probably be required by the lender to purchase home insurance. Even those who don’t need a loan will still need to make sure that they protect their property accordingly with a comprehensive home insurance policy. This is important for making sure homeowners have the money to replace their belongings and repair their property in the event of a disaster. At the same time, homeowners do not want to spend more than they must for a home insurance policy.