In this podcast episode we are discussing flood insurance deductibles. There could be a total of three different deductibles on your flood insurance deductible. We want to discuss each one and what they actually apply to.
So when it comes to flood insurance deductibles there could be multiple deductibles depending if you have a National Flood Insurance Program flood insurance policy or a private flood insurance policy.
National Flood Insurance Program Deductibles
Let's talk about National Flood Insurance Program deductibles first. When it comes to National Flood Insurance Program policies there are two types of deductibles.
You have the building deductible and you have the contents deductible. The building deductible only applies to the structure being insured or building. This covers things like the structure and servicing equipment like a furnace or even a circuit breaker. The contents deductible applies to your personal belongings like clothes, furniture, and appliances.
These deductibles could be very far apart. You could have a building deductible of $10,000 and a contents deductible of $2000. It's very important to understand which deductible applies to which scenario. Dealing with a flood can be, bad but then being surprised by a high deductible you can not afford can make things even worse. It's not uncommon for property owners to have to take out a loan to cover the deductible. Now that we have discussed the different deductibles on a National Flood Insurance Program policy lets review the deductibles on a private flood insurance policy.
Private Flood Insurance Deductibles
Private flood insurance works a little bit different from a National Flood Insurance Program policy. National Flood Insurance program policies are backed by the government, while private flood insurance policies are backed by private flood insurance companies. As a result different coverages apply on a private flood insurance policy.
There are three areas where a deductible could apply on a private flood insurance policy.
- Additional Living Expenses
Like a National Flood Insurance Program policy a private flood insurance policy also has a deductible for the building and contents. Similar deductibles are available. One difference is some private companies have a minimum deductible of $2000 while the National Flood Insurance Program offers a deductible of $1250.
One big difference between the National Flood Insurance Program and private flood insurance is the availability of additional living expenses. What is additional or temporary living expenses? If your home is not livable these are funds that are available on a private flood insurance policy to help in the short term. Like building and contents coverage these also generally have their own deductible. On most residential flood insurance policies these coverages range from $5000 to $25,000. The deductible for this coverage could be $1,000 or $10,000 depending on what you selected when you purchased the policy.
It's very important to look closely at your flood insurance policy as companies treat this coverage differently. Some may give the funds up front once the deductible is paid and others may do it on a reimbursement situation. This is something else that would be stated in the policy or policy jacket of your flood insurance policy.
Whether you have a National Flood Insurance Program policy or a private flood insurance policy its important to understand the deductibles. At the Flood Insurance Guru we normally recommend having the same $1,000 deductible on building, contents, and additional living expenses. This way when a flood hits you know exactly what is needed up front.
If you have questions about flood insurance deductibles or a flood insurance policy please visit our website Flood Insurance Guru. You can also check out our YouTube channel or Facebook page The Flood Insurance Guru where we do daily flood education videos. You can also click the link below to contact us or start a flood insurance quote.