You were told your home would never flood but now you are looking at 4 feet of water in your home.

 

 

It was recently determined that roughly 1 inch of water can cause $21,000 in damage.

So as you can imagine 4 feet of water could be a total loss.

This is exactly what happened to multiple customers of ours after the flooding in Centre Alabama in 2019.

While these residents had the coverage to replace their homes not everyone is as lucky.

Today we want to discuss what is flood replacement cost and what is actual cash value?

First of all replacement cost is the amount of money an insurance carrier feels it would take to rebuild your home.

So then what flood actual cash value? This is the replacement cost-depreciation.

As you can imagine after depreciation this can leave a pretty big difference.

Most of the time actual cash value does not come close to being enough coverage to rebuild your home. Time and time again we have seen property owners have to take out loans to cover the difference just to get their home rebuilt.

This is exactly what happened to many flood victims in the Tulsa Oklahoma area after the 2019 flood. Many of these residents only insured their properties for the amount they owed the bank. The problem is that this didn't give most property owners half the coverage they needed.

So what if full replacement coverage is not available?

This is common with National Flood Insurance Program policies as residential policies max out at $250,000.

In order to make sure you get replacement coverage up top $250,000 you need to follow the 80% rule.

 

This means you insure the home for at least 80% of the replacement coverage or $250,000.

What about private flood insurance companies?

Now each company has a different guideline. Some go off the 80% rule and some don't. The benefit is private flood insurance can offer much more coverage some times into the millions.

So if you have questions about flood replacement coverage then click here.

If you want to learn more about flood insurance then make sure to check out our podcast or our YouTube channel where we do daily flood education videos.

Remember we have an educational background in flood mitigation. This means we can help you understand your flood risks, flood insurance, and mitigating your property long term.

 

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Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

 

Over the past month I have done a lot of traveling shooting flood education content. On those travels I have been in places that have been hit hard by flooding over the last few years. I traveled to Houston, Galveston, and Wimberly Texas. These areas have all see major flood damage over the last few years.

These areas also house many secondary and vacation homes for property owners. Some of these properties have seen minor flooding and some have seen major flooding. Many of these areas have seen loss of life as a result of flooding.

Blanco River flooding Wimberly Texas

As Tropical storm Beta approaches these areas and is expected to drop large amounts of rainfall and storm surge we want to look at what you can expect when it comes to your Texas flood insurance policy.

Through out these two areas in Texas people have two different types of flood insurance. They have the National Flood Insurance Program and they have private flood insurance. These two programs can be pretty different when it comes to coverages. Most people jump to the private flood insurance market when they can because it's cheaper and you can get better coverage. I think many people through our Port Aransas, Houston, and Galveston will tell you to read your policy.

galveston Texas coast

We mentioned earlier many of these properties are secondary or seasonal properties. What you may not know is many private flood insurance companies default to an actual cash value basis on these policies.

So what exactly does that mean for your Texas property?

Well it means you won't generally get the full amount on your policy. If you have a $250,000 flood policy you may only get $125,000. That could be a big surprise couldn't it. Thats exactly what happened to a lady in Houston after hurricane Harvey hit. She had a $150,000 flood policy that only paid out $15,000.

So you ask why?

Well she did not insure to 80% of replacement cost or the $250,000 max that the National Flood Insurance Program offers so her policy defaulted to actual cash value.

Thats a big shocker. So when you are setting up this flood insurance policy or if you ever change your flood insurance policy in Texas you want to have your insurance agent highlight these areas of the policy. When switching private flood insurance carriers make sure you are truly getting replacement cost on your policy up to the amount you have listed on the policy.

Maybe you don't have an agent that has done this or you don't have an agent at all?

Then click here and we will be glad to do a review with you.

While there are multiple options for flood insurance in Texas you want to make sure you are getting the policy that is right for you.

So if you live in Texas and want to learn more about your flood insurance options then make sure to check out our daily flood education videos on our YouTube channel. You can also checkout our podcast for this video here.

 

Remember we have an educational background in flood mitigation. This means we can help you understand your flood risks, flood insurance, and mitigating your property to help you minimize flood losses and flood premiums.

 

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Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com