No. 9: National Flood Insurance Program (NFIP) coverage caps result in a high percentage of homes being underinsured, as the NFIP only covers up to $250,000 for a home and $100,000 for a home’s contents. In many states, the average home construction cost is well above this number and, as a result, many homeowners are stunned when they learn their insurance did not cover their full loss.
(In this July 2018 Associated Press photo, Alberto Castaneda talked about the damage at his Texas home, caused by Hurricane Harvey. Castaneda reportedly allowed his flood insurance to lapse two months before that storm hit and floodwaters ruined his property.)
No. 8: Insure your home to the amount it would cost to rebuild it. Most people significantly underestimate this number, and a quick Google search will find sites such as the National Association of Home Builders, where you can get a reliable estimate for your home type in your area.
(AP Photo/David J. Phillip)
No. 7: Inventory your belongings and choose contents coverage that meets the value of your possessions. In the middle of a pandemic is when many people have some free time to do a home inventory. It takes only a few hours and is less cringe-worthy with the assistance of online applications, such as Blue Plum, Sortly, Nest Egg and MyStuff, to name a few.
No. 6: Choose replacement cost coverage. It costs more, but no one wants to replace their 8-year-old couch with an 8-year-old couch. It provides great peace of mind to know that if you do lose belongings in a flood event, at least you will be able to buy like-quality new products to replace them.
No. 5: Get Temporary Living Expense (TLE, or sometimes called ALE) coverage. This covers hotels, meals, and some other expenses while your home is unlivable. This is the most common "gotcha" when it comes to a flood catastrophe, as these costs are excessive in the midst of an evacuation, and few people plan for this in advance.
No. 4: Get coverage for your external — or "unattached" in policy language — structures, such as a detached garage, pools, sheds or other outbuildings.
No. 3: Manage your cost with your deductible. Higher deductibles usually equate to lower premium, but higher out-of-pocket expense in a loss. Lower deductibles will result in a higher premium but the knowledge that your out-of-pocket expense will be modest.
(Bigstock/ALM Media archives
No. 2: Consider private flood insurance as an alternative to the NFIP. The NFIP does not cover any of the additional coverages listed above, so to be fully covered, homeowners should secure a private flood insurance quote as a comparison to their NFIP policy or quote. There are private flood providers in all 50 states and District of Columbia, backed by some of the largest and most secure reinsurers in the world. Often you can get more coverage — along with useful optional coverages — and still save money when compared to the NFIP.
No. 1: Last but not least, read your policy. It's not a riveting read but knowing what is in your policy, and therefore what you are covered for, is critical when you face a loss event.
A flood is a catastrophic event that results in permanent loss to personal items, homes and, more often than not, financial well-being. Many that are insured are surprised when they find out they were not adequately covered for many common losses. This article outlines simple steps you can take to ensure that you and your clients are properly covered, and avoid the anger and sting associated with unexpected losses.
The slideshow above includes nine tips for property owners who want to be sure they are fully covered by their flood insurance.
It’s important to protect what you’ve worked so hard to build. Don’t let simple mistakes or oversights cause you or your clients more stress — and financial loss — during a flood event.
Jim Albert ([email protected]) is founder and chairman of Neptune Flood in St. Petersburg, Fla. These opinions are his own.
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