Florida Homeowners Insurance Term: Define Flood Insurance

Flood Insurance refers to the homeowners' insurance, providing specific insurance coverage against property loss caused by flooding. It covers damages by providing financial assistance ranging from the repair work (replacing walls and flooring) to the need for full replacement of a home. Flood insurance policy is usually not a part of the standard property insurance policy but can be purchased by paying an additional cost. Individuals residing in coastal or flood-prone regions should definitely make flood insurance a part of their insurance coverage.

Flooding can result in a considerable amount of damage. It can not only destroy homes but also fill them with silt, mud and other debris. Besides, the moisture from the flooding can lead to mildew, mold, rot and other problems. After a flood, many household items need to be replaced or rebuilt and this can be very expensive. This is where flood insurance comes in. It mitigates these costs and proves to be of immense help to people who may not be left with much money and may be forced to abandon their homes.

To enable insurance companies to calculate the risk, many nations are divided into "flood zones." Based on the location of the property, the cost of the flood insurance policy can vary. When determining the risk factors for particular properties, property insurance providers tend to refer topographical maps to determine the floodplains and lowlands that are susceptible to flooding.

In the US, as the danger of flood is usually confined to very few areas, insurance companies don't include flood insurance coverage in their typical insurance policies. However, not many people are aware of this fact. As per the poll conducted by the National Association of Insurance Commissioners (NAIC), around 33% heads of household in the US still have a misconception that a standard homeowner's policy covers flood damage.

As per the reports of Federal Emergency Management Agency, around 50% of the borrowers living in low flood risk zones hold a false belief that they can't buy flood insurance policies. However, the truth is any person living in the US can opt for a flood insurance policy as long as his/her community participates in the NFIP- the National Flood Insurance Program created by the federal government in 1968.

If you live in a coastal region that is susceptible to flooding, it is very essential for you to add a flood insurance policy to your standard homeowner's policy. When buying a flood insurance policy, you need to ensure that you buy it through an insurance provider that participates in the NFIP.