Its important to understand the different stages of a disaster and how they each represent a different pillar of flood insurance. There is preparedness, response, recovery, and mitigation.. Today we are specifically going to discuss flood preparedness.
Being prepared for a disaster is crucial for survival. So let's talk about preparedness in regards to flood insurance. One of the first steps in preparing for a flood is making sure you have the right things in place. This should start with having a flood insurance policy in place through either the National Flood Insurance Program or private flood insurance.
Understanding the policy
Understanding the flood insurance policy is just as important as purchasing the policy. What could is a flood policy if it doesn't have the right coverages. On protecting the building you want to make sure you can get as much coverage as possible. If going through NFP this maxes out at $250,000 on residential buildings but private flood can go higher. Its important to know just because your policy goes to this amount does not mean you will get this amount. You want to pay attention to what the policy states on loss settlement because this could determine what amount you get.
Protecting your belongings with flood insurance can be the difference between losing everything and losing nothing. This is going to cover things like clothing, furniture, and other household items. An NFIP policy will cover contents up to $100,000 and you can get more through the private market. Most policies will be written on an actual cash value basis which means you won't get the amount it would cost to replace these items today. There are a few private flood insurance companies that do offer this coverage but you want to pay attention to exclusions.
Temporarily Living Expenses
If your property floods more than likely you are going to need a place to stay. Its important to understand that while a NFIP policy does not provide this coverage you can get it if a presidential disaster declaration has been filed. You can get this coverage on a private flood insurance policy. Its generally limited to $25,000 and on a reimbursement basis.
Picking the right deductible
Picking a deductible can be a dangerous decision you want to make sure to select a deductible that you can afford and have an emergency fund big enough to cover. So many people pick a $5000 or $10000 deductible but when a flood occurs they can't afford the deductible. As a result the claim can not be processed.
Disaster Emergency Fund
Flood insurance works a little bit differently than things like a house fire or roof leak. Floods take a long time to recover from and can break the bank no matter who you are, even if you have flood insurance. Many parts of a flood insurance policy are done on a reimbursement basis. It may take 3-6 months to get your money back in some situations so its important to prepare for this. Its normally recommended that you have a disaster emergency fund that can cover up to 6 months of living expenses.
Flood insurance preparedness is a crucial part to making sure flood response, recovery, and mitigation are successful. Want to learn more about flood preparedness? Check out our YouTube channel or Facebook page The Flood Insurance Guru where do daily flood education videos and our weekly podcast The Flood Guru.