Life happens. More importantly, nature happens. And though thinking about natural disasters might feel morbid and unpleasant, protecting your home from the beautiful but volatile ocean is a must when you live on Long Beach Island. In fact, depending on where you choose to plant roots, flood insurance could be a requirement of your mortgage.
That said, let’s take some of the mystery out of the process and outline a few key things to remember when insuring your custom home.
Why Purchase Flood Insurance
First, it’s essential to understand that flood insurance is not automatic with homeowners and renters insurance; the coverage remains separate. If you live in a flood zone, the policy will be required, but if not, you should still consider flood insurance a priority, as more than 20 percent of claims come from properties outside these high-risk areas. In addition, water damage caused by flooding can leave you financially and emotionally devastated. The out-of-pocket burden is simply not worth the risk. For example, without insurance you can still get financial assistance for flood damage, but it comes in the form of loans that must be repaid. However you slice it, should you need relief, you'll want it to come from a fair insurance-backed payout. In good news, if you live outside a flood zone, your premiums will be more affordable.
What Flood Insurance Covers
In most cases, flood insurance covers both the physical losses from flooding and those arising from flood-related erosion generated by currents or waves that exceed estimated cyclical levels (those that follow a severe storm, unusual tidal surge, or flash flood). An important thing to note: coverage for the structure and its contents are sold separately. While there is a replacement cost for the house, personal property coverage is calculated by its actual cash value.
Also, the cause of flooding comes into play when filing a claim. Namely, flooding that comes on by man-made occurrences (like a sewage backup) doesn’t count. Nature has to wield the weapon. Unless man-made systems malfunction as a result of a flood, you will need to seek financial assistance elsewhere.
Where to Begin
Although thousands of agents exist to sell you flood insurance policies, you can often get help through your renters or homeowners insurance agency. If that direct route doesn’t pan out, try contacting the NFIP (National Flood Insurance Program) Help Center. This handy program seeks to limit the impact of flooding on public/private structures by providing cost-effective insurance policies to businesses, homeowners and renters.
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Helpful Topics to Cover with the Insurance Agent
Sometimes it seems like insurance policies exist to boggle the mind. Nonetheless, insurance is an essential aspect of home ownership, so brushing off the hassle and getting on with it will help you maintain sanity should disaster strike. And if that crucial moment should come to pass, you’ll be happy you asked the right questions beforehand. Here’s a look at important questions to ask before you seal the deal:
- Will my lender require flood insurance?
- What is the flood risk for my property? Do I live in a flood zone?
- Do I qualify for a lower cost policy or PRP (Preferred Risk Policy)?
- When will the policy go into effect (it can be up to 30 days in some cases)?
- What exactly is covered?
- Is the policy backed by the federal government?
- What can I do to reduce the cost of my flood insurance?
- How much coverage should I am for in regards to both building and contents?
- Who should I call if I need to make a claim?
- How is the policy renewed and paid for?
Once you’ve built the house of your dreams, why not take every pain to shield it? If you’ve never considered flood insurance before (or never needed to), make 2019 the year to stay protected. Also, don’t forget to renew any flood insurance policies you’ve already established. Most don’t automatically renew, and though you should get a notice by mail or otherwise, letting coverage lapse for too long could have unsavory consequences.