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Flood Insurance

That last thunderstorm left you worried. For a moment there, it seemed as if your basement, like the hull of an old sailing vessel, might take on water. But before you break out the sandbags or put the kids' old toys up on pilings, call your insurance agent and find out about flood insurance.

A bridge over troubled waters

Because your homeowners policy doesn't cover damage from flooding, you'll need to purchase a separate flood insurance policy to obtain coverage for your home and its contents. Fortunately, flood insurance is widely available from insurance companies that participate in the National Flood Insurance Program (NFIP), a partnership between the Federal Emergency Management Agency (FEMA) and the private insurance industry. A handful of insurance companies also offer excess flood insurance policies that can supplement NFIP coverage.

You're eligible to purchase national flood insurance if your community is one of the approximately 19,000 nationwide that participate in the NFIP. Participating communities must adopt certain floodplain management practices in exchange for the availability of flood insurance for their residents.

Do you need flood insurance if you live in a cornfield?

You should consider purchasing flood insurance even if you don't live in a high-risk area for floods. According to FEMA, approximately 25 percent of all flood insurance claims come from areas that are at low to moderate risk for floods. Even if you don't live near the ocean, a river, or other body of water, factors such as storms, melting snow, inadequate or overloaded drains, or hurricanes can cause serious flooding. If you're buying a home located in a high-risk flood zone, and are obtaining a federally backed mortgage, you'll be required to purchase flood insurance.

How do you purchase flood insurance?

If you decide you want flood insurance, start by calling your homeowners insurance representative. Although NFIP policies are backed by the federal government, they're sold through private insurers. If your current insurer can't offer you flood insurance, call the NFIP Telephone Response Center at (888) 379-9531. The response center can provide you with names of local agents or companies who can sell you flood insurance.

High tide: flood insurance limits

A flood insurance policy offers flood protection for both your home and its contents. With an NFIP policy, you can purchase up to $250,000 of coverage for the building itself and up to $100,000 of coverage for the contents. If you own a home whose value exceeds the amount available through the federal program, you may want to look into purchasing excess flood insurance through a private insurer. Excess flood insurance covers amounts above the $250,000 federal limit, and unlike NFIP coverage, may cover your home for its full replacement cost. You may be able to purchase these policies even in high-risk flood zones. A few insurance companies have also begun offering flood policies designed to replace NFIP coverage, but these policies are generally available only in low-to moderate-risk flood zones.

Will the cost soak you?

According to FEMA, the average annual premium for a $100,000 flood policy is a little over $500. But because the cost of flood insurance depends on many factors, including the type of occupancy (e.g., single family, nonresidential), the amount of coverage, and the location, design, only your insurance representative can give you an accurate premium quote.

What else should you know about flood insurance?

Here are some other facts you should know about flood insurance. First, you can purchase an NFIP policy at any time if you live in a participating community, but a 30-day waiting period generally applies before the policy becomes effective. Second, you can purchase an NFIP policy even if you live in a high-risk region for floods. As long as your community participates in the NFIP, insurance companies will be able to offer you a policy. Third, NFIP policies don't cover flooding from wind-driven rain or damage from hail. Your homeowners policy will likely cover these situations.

Finally, NFIP policies offer some protection for flood-related basement damage. They ordinarily cover items like furnaces, water heaters, foundation elements, stairways, and oil or natural gas tanks, as well as appliances such as clothes washers, dryers, and freezers. They don't cover basement structures such as finished walls, floors, ceilings, or personal belongings like furniture or clothes. But even though they don't cover all types of damage, flood insurance policies still offer broader protection against basement flooding than standard homeowners insurance policies, so they're generally your best bet for dealing with basement flooding expenses.