Floods are a serious risk that can destroy your home and its contents. Fortunately, there is an option to protect against this danger – flood insurance. There are a few factors that influence the cost of flood insurance. These include your property’s flood risk, building characteristics, type of policy, and deductible amount.
Cost of Coverage
Homeowners who live in high-risk areas need flood insurance. However, only some people need it. The average cost of flood insurance in Florida depends on several factors. The most important is the historical risk of flooding in your region. You can also reduce costs by protecting your home and possessions from water damage. For example, elevating your water heater and furnace above the first floor can help prevent them from getting damaged during a flood.
Another way to save money on flood insurance is to purchase a policy with a higher deductible. This may make the monthly premium more expensive, but it will help you avoid a significant loss if you file a claim. If you need more clarification about your risk, ask your insurance agent about a flood zone report.
This report will tell you how likely your home is to flood and how much it could cost to repair or rebuild after a flood. Buying a flood insurance policy can be a financial investment, but it pays off in the long run. For many homeowners, it’s worth the investment to have peace of mind knowing their homes and possessions are protected from potential damages.
Deductibles
Deductibles help you control the cost of your flood insurance policy and ensure you can afford to pay for your loss if you need to file a claim. Deductibles are similar to those you would choose for car or homeowners insurance. They can make a big difference in your overall insurance cost. Flood insurance deductibles typically start at $1,000 and can increase to $10,000 for your home’s structure and contents.
In addition, you can get a discount for choosing a higher deductible. If you live in a high-risk area, consider adding additional coverage riders or endorsements to your flood policy. These can extend your coverage to cosmetic improvements to basements, new furniture and carpeting, appliances, and other items not covered by a standard homeowners policy.
Exclusions
If you live in a flood-prone area, consider purchasing flood insurance. However, there are specific exclusions to be aware of when buying flood coverage. For example, one of the most significant flood insurance exclusions is that water damage is not covered unless the cause is a peril specifically listed on your policy.
Typical examples of such perils include flood, sewage, and drain backup. Another type of exclusion is that water damage is not covered if it results from an internal cause, such as a leaking pipe. This exclusion also covers standing water and groundwater, although it needs to be clarified.
While the water damage exclusions listed above are standard, it’s essential to understand that many other types of events that can cause flooding are excluded from standard property policies, such as sewage or water primary backup and tsunamis. Some homeowners and renters can purchase specialized insurance to cover these excluded events.
Cost of Repairs
A flood insurance policy pays for repairs if your home is damaged by water. This type of coverage differs from homeowners insurance, which covers damages caused by other causes, such as a tree limb poking a hole in the roof or heavy rains damaging the ceiling and floors. In the event of a claim, you can submit an insurance check for repairing your home.
This amount will cover the costs of removing damaged items, replacing them with new ones, and any other costs involved in the repair process, such as Water Damage Restoration. As with homeowners insurance, flood insurance costs depend on your location. Your home’s location and elevation are the most significant factors affecting your flood insurance premium. Elevating your home can lower the damage you are exposed to and reduce your flood insurance premium.
For example, elevating electrical panels, heating and cooling systems, and water heaters above your home’s base floor elevation can decrease the damage likely to occur in flood. Another factor impacting your flood insurance premium is how old your home is. Homes built with modern construction techniques and materials can be less susceptible to flooding than older homes.
For example, newer homes may include floor openings that allow water to drain out more quickly, which can lower the overall cost of repairs. On the other hand, older homes that use older materials and techniques may require extensive custom lumber milling to repair them. The deductible level you choose for your flood insurance policy can also impact your policy costs.
Choosing a high deductible can lower your premium initially, but it will hurt you if you file a claim and are required to pay it out of pocket. For this reason, it is a good idea to talk with an agent about your options and find the level of deductible that makes financial sense for you.