Floods can happen anytime to anyone. While some areas are at more risk than others, factors like flash floods, new construction that changes run-off patterns, winter storms and snowmelt and others can also cause flooding, no matter what the risk in your area.
What is flood insurance?
A flood insurance policy provides variable amounts of building and contents coverage for all properties including homes, rental units, condos and commercial spaces. Basic policies cover buildings and contents, however, personal property insurance is optional and you may want to consider it as well.
Who is it for?
People living in high-risk areas are often required to purchase this type of insurance as a term of their mortgage but the types of insurance may vary. Basic coverage is a given, but particularly for those in high-risk areas, the personal property option should also be considered.
This type of insurance should also be considered even if you live in a medium risk area. It is estimated that 25 per cent of claims are made by owners in areas not considered high risk.
How it works
Insurance against a flood is NOT included in regular homeowners insurance, a widespread and often catastrophic assumption, so you must purchase this insurance separately. Funds are typically made available only 30 days after the occurrence.
Types of insurance
In low- to moderate-risk areas, insurance for flooding will often include both building and contents, however, in high-risk areas, these policies must be purchased separately.
Renters can also purchase content insurance, however, in high-risk areas, factors including the state of the building, not the individual dwelling, will be taken into account.
What are the benefits?
Everyone is at risk of flooding and only one inch of flood water can cause thousands of dollars in damages. In 2007, the average claim was $24,000 and with inflation that would be substantially higher today. Imagine losing $24,000 in the blink of an eye. Do you have the funds available to cover this type of loss?
Every area is at risk of flooding. Factoring insurance against of flood into your budget today can save you undue financial hardship in the future.