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Diving into Flood Insurance

As I write this, Hurricane Florence continues to wreak havoc in the Carolinas. Both North and South Carolina continue to be affected by epic flooding as some areas have been hit by 30-40-inches of precipitation. This doesn’t even take into consideration how much more flooding will take place as rivers in the area top their banks. The worst part of the disaster will be the fact that many homes and businesses that will sustain flooding were not in designated flood zones. That means many families and business owners affected by flood waters do not have flood insurance.After dealing with the aftermath of Hurricanes Mathew and Irma during the past two years, I felt it was high time to dive into the ins and outs of flood insurance. 1. Do flood zones matter? – Many people make the mistake of failing to procure flood insurance simply because their homes and businesses aren’t located in a flood zone. Just because your property isn’t located in a designated flood zone, that doesn’t mean your property can’t be flooded. The only thing a flood zone indicates is a higher likelihood of flooding due to the prevalent topography. It’s just a line on a map. It will do you little good to point at the line as a defense should your home become flooded. You can bet there will be many who live in the Carolinas who wish they had purchased flood insurance regardless of which side of the line their home is located. 2. What does flood insurance cover? – To begin with, your homeowner’s insurance policy does NOT cover flood damage. While it may cover some damage caused by rain, if your home is damaged in any way due to rising water, forget about cashing in on your homeowner’s policy to cover the damage. Even if you do have a flood policy, there are two components: property damage and personal possessions Image courtesy of flickr 3. What is covered when it comes to property damage? – As well as covering damage done to a structure, the Federal Flood Insurance Program covers everything from damage done to a property’s electrical and plumbing system, kitchen appliances including the stove, refrigerator and dishwasher, to the water heater, air-conditioner, wall-to-wall carpeting, and even such things as permanently installed cabinets, bookcases and paneling. Additionally, a property policy provides for debris removal directly related to flooding. 4. Personal Possessions– If your flood policy provides coverage tor personal possessions, this includes clothing, furniture and electronic equipment, curtains, portable appliances, throw rugs, and up to $2,500 in valuables such as artwork and furs. 5. What isn’t covered – There are a number of exclusions when it comes to flood policies. If you left behind such valuables as cash, stock certificates, precious metal, or jewelry only to find out that flood waters have swept them away, you’re out of luck. On the structural side there are also a number of exclusions including swimming pool, hot tubs, patios, fences, decks, walkways, wells and septic systems. If your car was parked in your garage or in the driveway when a flood hit, the garage is covered, but your vehicle is not. (Check with your auto insurance carrier to see if comprehensive will help cover flood damage.) The same goes for food spoiled in the fridge. (The fridge yes, the food no) If your trees and bushes were damaged or killed by the flood, this isn’t covered either. While flooding can cause mold damage, this is another exclusion on flood insurance policies. Image courtesy of flickr 6. Temporary Housing – What happens if you come back to find your home uninhabitable? Typically, that means you have to move into temporary housing. Don’t expect to get reimbursed for living expenses caused by flooding. That’s the bad news. The good news is your homeowner’s insurance should cover the cost for temporary housing while your home is being repaired. 7. How long do I have to wait to start the repairs? – If you have a flood insurance policy and you want to be reimbursed for the damage, don’t begin repairs until the claims adjuster has inspected your property. That being said, if you need to shore up your home or plug leaks to keep additional damage from being done to your property, take photos first and keep receipts for all supplies purchased for this purpose. 8. What do I do with soaked items? – After a flood, you could come home to find your furniture, carpeting, clothing, beds & bedding a soaking mess. While you may wish to haul a lot of this ruined stuff to the curb for removal, if you do so before the claims adjuster arrives, you could wind up being denied compensation. If you want to get reimbursed, you need to save any flood-damaged items for the adjuster to inspect. The best course of action would be to either store the items in the garage until the adjuster shows up or pile it up outside. Either way, make sure you take photos of everything you wish to be compensated for, as well as keeping an inventory of all your ruined items. When it comes to carpeting, you don’t have to keep the entire rug, just a 2x2 foot piece for the adjuster to inspect. 9. What else do I need to file a claim? – Bear in mind when it comes to getting reimbursed, the onus is on you to prove an item’s worth. When it comes to damage done to possessions, an adjuster will take into consideration an item’s approximate value based on its age and condition. If you can provide sales receipts for flood damaged items, this will help the adjuster get a more accurate valuation as opposed to having to guess at an item’s value. Coming back to a flood-damaged home is something none of us hope to experience. However, there’s no reason to compound the tragedy by sticking your head in the sand instead of adding flood insurance that can help you keep from getting sucked under financially.

How to Save on Homeowner’s Insurance?

Diane Tait Diane Tait , 10/1/2018
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For most people, owning a home is the biggest investment they will ever make.  To protect this investment, you need to carry homeowner’s insurance.  That’s a given.  The trick is determining how much homeowner’s coverage you need.  Get it right, and you’llbe covered for unexpected crises that wind, weather, and happenstance can throw at you.  Get it wrong, and you can be left holding the bag if something happens to your home.  Nobody wants to pay more than they should for anything, including homeowner’s insurance.  Of course, nobody wants to find out after a catastrophe that the damage done to their home isn’t covered under their current policy.  To help you determine the optimum level of coverage you need, today I will give you some food for thought when it comes to your homeowner’s policy.

Surefire Money Savers

When it comes to saving money on your homeowner’s policy, there are several no-brainers that can save you money without watering down your coverage:

1.      Pay annually instead of monthly – While paying your premiums on a monthly basis is convenient, it also costs you more, since finance charges are built-in.  Paying off your annual premium in advance can represent a significant saving.
2.      Increase your deductible – Another way to reduce the cost of your policy is to increase the deductible.  If your deductible is $200, by increasing it to $500 or $1,000, you will save money.  Some insurance providers will even let you take a deductible equal to 1% of your home’s value, which will save you even more.  Sure, if your home is worth $250,000, having to shell out the first $2,500 sounds like a big deal.  But if you do the math, you’ll find the savings quickly offset the deductible, after which time it’s like putting money in the bank.
3.      Add more safety features – Another way to reduce the cost without reducing your coverage is to invest in added safety features in your home.  Do you have a monitored security system?  How about hard-wired smoke detectors and carbon monoxide detectors?  These can protect your family while reducing your insurance bill.  Even physical improvements, such as adding hurricane shutters or impact-resistant windows can reduce the cost to insure your home.  If your house is more than 20-years old, upgrading the electrical system can also represent an insurance saving.
Image courtesy of Pixabay
4.      Kick the habit – If you’re a smoker, not only do you pay higher premiums for your health insurance, you also pay higher rates on your homeowner’s policy as well.  Insurers recognize homeowner’s who smoke are more likely to have their house go up in smoke.  Therefore, they charge higher premiums for smokers, than non-smokers.  Kicking the habit is another way to reduce your premiums.
5.      Bundle your policies – If the company that insures your home also insures cars, or sells life insurance, switching all your policies over to one carrier can also represent a significant saving.
6.      Go paperless – Save some trees and a few dollars per month by opting for paperless billing.
7.      Are you 55 or older? – If you’re in your golden years, you might be able to save some gold, since a number of insurance companies offer discounts to seniors.
8.      How’s your credit rating? – Another factor used to determine insurance rates are credit ratings.  The higher your credit score, the lower your premiums will be. 

Are You Over-Insured?

When many homeowners decide how much coverage to take out on their home, they make the mistake of choosing a number that represents what they paid for the home, as opposed to how much it will cost to rebuild in the event of a disaster.  It doesn’t matter that you paid $350,000 for your home if your insurer determines that it only costs $250,000 to rebuild. Remember, part of the price you paid for your home is the value of the land upon which it sits.  Including this in your coverage estimate means you will pay a higher premium than necessary.

Image courtesy of Pixabay
Review the limits for personal possessions and reduce them where possible.  If your wife no longer owns that $10,000 sable jacket, or you traded in your Rolex for an iWatch, make sure you bring these facts up with your agent.  Termed floaters in the industry, this additional coverageinsures high-end items not normally covered under your homeowner’s policy.  If that van Gogh has gone, make sure you tell your agent to adjust your policy if you want to save.

Are You Under-insured?

The other side of the coin is to make sure you don’t under-insure your home.  As much as you hate to pay premiums, think of what would happen if the worst came to pass and you found you were insufficiently covered to repair or replace your home. Below are several factors you need to consider:

      1.      I don’t live in a flood zone – Just because your home isn’t in a designated flood zone doesn’t mean it can get flooded. Especially in Florida, where hurricanes are a possibility in any given year and thunderstorms are an almost daily occurrence in the summer, having flood insurance is a good idea. 
      2.      Consider adding Hurricane Coverage – If you want to avoid paying a hurricane deductible equal to 1-2% of your home’s value in the event it is damaged during a hurricane, you should look at adding hurricane coverage. 
      3.      Do you SOHO? – If you run a small business from your home, you need to tell your agent about this if you want to cover your business equipment. Many homeowner’s policies limit the coverage of business equipment to only $2,500.   They also don’t include business liability coverage.
When it comes to saving on your homeowner’s policy, the two most important factors is saving your house comes first, saving a few bucks comes second.  Talk to your agent to determine the best ways to accomplish both these goals.
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