Pennywise
Weather Insurance
Weather insurance is usually offered to people who run businesses and is usually offered on a per…
Insurance Pool
An insurance pool is a communal pool of property from several insurance companies. Pooling is emp…
Flood Insurance
by: Sahil | last updated: November 27, 2009
Category: Hurricane Insurance | Tags: Flood insurance, home insrance for floods, flood
Category: Hurricane Insurance | Tags: Flood insurance, home insrance for floods, flood
Flood insurance is a homeowners’ insurance that protects against damages caused due to floods. However this type of insurance is usually not included in the typical homeowners insurance policy and has to be purchased additionally. People living in flood prone areas should definitely consider buying flood insurance.
This type of insurance has caused some stir among governments and insurance companies due to the inefficiency of the same. This is because of a factor known as adverse selection in which the number of claimants exceeds the number of people interested in protecting their property from the peril, which means that insurers are unable to cover their costs in flood insurance.
In the United States, flood insurance is usually not part of a traditional homeowner’s policy. This is due to the fact that floods are an unacceptable risk and floods are typically confined to only a few areas. In light of this the government of United States has created the National Flood Insurance Program in order to provide flood insurance to the general populace. The only requirement is that the community in which a person is living must be affiliated to this program.
When a flood insurance policy is established, the insurance company inspects the home and its site to find out the risk. Dwellings in floodplains, low lands, and regions exposed to hurricanes and other harsh storms are at augmented risk of flooding, as are houses in dry valleys which are prone to flash flooding. The price of flood insurance differs, depending on the place of the house, with many nations being divided into “flood zones” by insurance companies to assist them in computing the risk.
The term flood is defined by the National Flood Insurance Program as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties (at least one of which is your property from: Overflow of inland waters, unusual and rapid accumulation or runoff of surface waters from any source, and mudflows).
National Flood Insurance Program - National Flood Insurance Program was created by the United States congress in 1968 that enables property owners in participating communities to procure insurance protection from the government in case of damage due to flooding. According to this program a community will adopt and implement a floodplain management ordinance to decrease future flood risks to new construction in Special Flood Hazard Areas (SFHA), and the federal government will make flood insurance accessible within the community as a financial security against flood losses.
There are many myths about the National Flood Insurance Program and flood insurance in general and some of the most common are – the program does not cover flooding due to hurricanes or river overflows or tidal waves, homeowners’ policy automatically covers against floods, and insurance is available only for owners and not renters. All these are only myths and are not completely true.
The FEMA regulates and controls the National Flood Insurance Program and their website has extensive and detailed information about flood insurance and related topics. A quick visit to fema.gov can give you a clearer picture as far as flood insurance is concerned.
Guide Discussion & Comments
blog comments powered by Disqus
Hi there,I am Sahil
I hope you like this guide and benefit from it.
Add me as a friend to track changes to this guide as well as my new guides.
Like this guide?
Stats
75 views
0 star rating
0 Other guides by Sahil
Terrorism Insurance
Terrorism insurance is one which is purchased by property owners in order to cover the losses and…
Boat Insurance
Many people use boat insurance to protect their vessels firstly because they are expensive and se…
Property Insurance
Property insurance provides safety against damage to the property due to fire, theft or some othe…
Private Mortgage Insurance
Private Mortgage insurance (PMI) is an insurance policy that compensates lenders or investors for…
Renter’s Insurance
Renters insurance is useful for people who rent a house; while the house may not be an asset of t…
