How to Insure the Structure of Your Home with Flood Insurance

Today, we'll make sure you're still going to have a roof above your head when a flood happens.

In this video, let's talk about your flood insurance policy and its dwelling coverage or most commonly known as your building or property coverage. How does this flood insurance coverage works, how it plays with your flood policy provider, and what exactly is it?

Dwelling coverage basically is the amount that the flood insurance company provides for the costs with the replacement of your home or business property. All flood insurance companies pay the most out for the coverage of your insured building. Now, I said "insured building" specifically because there might be properties outside your main house or main building on a commercial business that may not be covered by your policy.

The amount that the flood policy can cover depends on what type of flood insurance you have. For example, the National Flood Insurance Program (NFIP) and the Federal Emergency Management Agency (FEMA) provide a max of $250,000 for the replacement cost on residential property and this goes up to $500,000 if the insured building is a commercial property (at the time of writing). This won't include contents or items that were impacted by the flood since that's an additional coverage altogether. To add to this, if you have another structure in your personal property that's not really connected to the main property, this may cause an additional, surcharge or a separate policy thus increasing the flood insurance premium you're going to pay.

In the private flood insurance market, the replacement cost for your property can go up to $10,000,000 if you want to. Basically, it ensures that your property will be covered. In comparison with federal flood insurance from the NFIP where they have a limit on what they'll cover.

Replacement cost for structures generally has the same concept as with our previous video (Content Coverage) wherein the flood insurance company — regardless if it's federal flood insurance or from the private market — will cover the costs for repairing or replacing the building. This means that you won't really have to worry about the building materials, construction, or water system since the policy will do it for you. It's important to mention that the replacement cost coverage is only for the structure itself, so even if you have a lot area that's worth $300,000 this won't be covered by your flood insurance policy even if it's totaled by flood damage.

Picture this, your home is worth $300,000, the NFIP flood insurance can only provide a max of $250,000 regardless of your property's original value, so that may be disappointing since you're going to accept that they're going to have to cut corners. This is one of the benefits of private companies since they're not limited to a specific amount to replace your house.

It's also important to mention that the amount that flood insurance company provides for property coverage won't depend on your flood zone. Regardless if you're in a preferred flood zone or maybe in high-risk areas, you will still receive the agreed replacement cost for your property. This doesn't mean however that your flood insurance rate and annual premiums won't be affected since the NFIP and private market will refer to the property's position compared to the flood map and flood zone you're in.

It's important you communicate with your insurance agent on this regardless if you're under the National Flood Insurance Program or a private insurer's policy especially if you're in a high-risk flood zone because you'll be required a flood policy for your property since you have the higher risk of flooding when a natural disaster suddenly visit your community. These things aren't really going to be covered by any standard homeowners insurance policy. If you want to save your property and all your valued items and possessions, you might want to reconsider you're next move.  

Now, if you have any questions on your flood insurance rates, how your base flood elevation can impact your personal property, common limits of flood policies, flood claims, or anything about flood, please feel free to reach out to us by clicking below.

Remember, we have an educational background in flood mitigation, so as disasters are becoming more unpredictable, flood plain constantly changing, flooding effects and flood risk being ever-present, it's best that you are educated and well-aware when it comes to your flood insurance, so that when flooding happens you know what to do to mitigate your property long term.