Are You Covered for a Storm?
Many South Carolina homeowners who suffered flooding after devastating storms are in for an unpleasant surprise as the waters recede, said Ritika Shah in CNBC.com. “Much of the residential damage caused by Hurricane Joaquin is most likely not going to be covered by insurance.” Only 14 percent of Americans are insured against flooding, according to the Insurance Information Institute. With the exception of a few private insurers, flood coverage is provided “almost exclusively” by the National Flood Insurance Program. With the average premium about $700 per year, many homeowners in low-risk areas balk at the added cost, even though more than 20 percent of flood claims come from people outside of high-risk areas. Others incorrectly assume they’re already covered. “While most disasters are covered under a standard homeowners policy, flooding is not.”
The situation in South Carolina “serves as a solid reminder to make sure you’re properly covered,” said Kristin Wong in NBC News.com. Don’t expect to buy coverage at the last moment. Nearly all flood policies require a 30-day waiting period before becoming effective. Federal flood insurance covers up to $250,000 for your home, and up to $100,000 for personal possessions. However, these policies don’t cover temporary living expenses, or damage to outside property, like decks and patios. How the government defines a high-risk flood zone—which affects your premiums—can be tricky as well. A 100-year flood zone means there’s a 1 percent annual chance of flooding in your area. But even if your area has been recently hit, “it doesn’t mean you’re out of the woods for the next century.”
“Homeowners who go without coverage have little recourse in the event of a flood,” said Ann Carrns in The New York Times. Some federal disaster aid covering temporary housing and repairs is available for low-income households, but most homeowners are only eligible for lowinterest loans that must be repaid. Those who do have coverage should move quickly to document the damage to their homes. Flood claims usually have to be filed within 60 days.
“For those on the East Coast, the hurricane season is almost at an end,” said Quentin Fottrell in MarketWatch.com. But it’s never too early to prepare for next year. The hurricane season in the Atlantic region begins June 1 and ends Nov. 30. In the Pacific, it begins May 15 and also ends in November. Hurricanes bring their own complications in the form of hurricane deductibles, which kick in with 74 mph winds or when the storm makes landfall as a Category 1. Deductibles can range from 1 percent to 5 percent of the total policy, or $15,000 on a home insured for $300,000.
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