Facts About Hurricane and Flood Insurance

Facts About Hurricane and Flood Insurance - Quicken Loans Zing Blog Less than a month into hurricane season, Tropical Storm Isaac has gained strength and ripped through the Gulf of Mexico on a path that’s eerily similar to Hurricane Katrina’s in 2005.

As Isaac nears Category 1 hurricane strength, reports reveal the Tropical Storm is poised to hit the Gulf Coast, particularly Louisiana and Mississippi, later this afternoon.

While numerous Gulf Coast residents have stocked up on supplies and made the necessary precautions to prepare for the turbulent weather, many of those homeowners can obtain the added protections that hurricane and flood insurance provide against tropical storm devastation.

Here are a few facts about hurricane and flood insurance:

Flood coverage

Believe it or not, a few inches of water from a flood is enough to cause tens of thousands of damage to a home.

According to the FloodSmart website, the average paid flood insurance claim is approximately $34,000, making repairing flood damage on your own dime a potential financial disaster!

Although some federal agencies like the VA and the FHA require flood insurance to secure a mortgage loan in specific flood-prone areas, many private insurers don’t offer flood insurance because the probability of them making a profit off this type of insurance is not likely.

Only 20% of all homes in the United States that are at risk for flood damage actually have flood insurance, according to FloodSmart.

While homeowners in high-risk areas and moderate-to-low risk areas are all eligible for flood policies, renters are also eligible for renters contents flood policies to protect their personal possessions.

The flood effects of Hurricane Katrina left many Americans with undying images of the fateful day in 2005.

While flood insurance may not help the residents in these high-risk areas with effective evacuation procedures, flood policies will definitely help these residents repair their homes faster in the event of an environmental disaster.

Hurricane coverage

Although your typical homeowners insurance policy may cover damages caused by hurricane winds, many private insurers require a separate deductible for hurricane damage that is usually a set percentage (between 3 and 5 percent) of the hurricane damage cost.

Yet, damage caused by water (and not wind) must be covered by flood insurance; typically purchased through the National Flood Insurance Program.

For standard flood insurance in coastal or high-risk areas:

  • A $580 annual premium will cover up to $45,000 in personal property and building coverage.
  • A $5,903 annual premium will cover up to $350,000 in personal property and building coverage.

Three items not covered by hurricane or flood insurance include:

  • Precious metals
  • Paper or coin currency
  • Stock certificates

Homeowners looking to recoup damages to their fences, swimming pools or decks will also be turned away by their insurers, as these items are not covered under hurricane and flood policies.

It usually takes at least 30 days to obtain flood insurance meaning homeowners in coastal regions looking for flood protection from Tropical Storm Isaac may be too late.

Nonetheless, if the president declares your region a disaster zone, you may qualify for federal assistance via federally subsidized loans from the United States Small Business Administration.

 

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