Understanding how flood insurance protects your home and belongings

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Flood Damage from Hurricane IreneFlood insurance is a form of protection that provides coverage for a home and the possessions it contains, in case they should ever be damaged or lost as a result of water rising from an outside source.

Though standard homeowners insurance will usually protect against flooding due to a broken pipe, for example, it would not cover damage from water that flowed into the home from a rising river, creek or even rain.

While many homes are not located within areas that are recognized as having a high flood risk, those that are (for example, those in the 100-year floodplain) will usually require flood insurance before lenders will offer a mortgage on the property. Unfortunately, all too many lenders and homeowners focus on whether or not the coverage actually exists and not if it is actually adequate to cover the cost of the house or any of its contents.

A large number of homeowners with flood insurance don’t realize that they are not adequately covered until they actually need to make a claim.

Moreover, more than a quarter of the flood damage that happens every year occurs on properties that are outside of the high flood risk areas. By purchasing additional flood insurance, these homeowners can protect their homes and belongings for a relatively low cost.

The most challenging part of this process is making sure that you understand the terminology of the flood risk and flood insurance policies before you make your purchase. These policies are typically riddled with engineering and insurance jargon and references to “Flood Zone” designations. It is best to take the time to find out what the policy means so that you will know whether or not it will provide you with adequate coverage in the case that it should ever be required.

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