Water damage and flood damage are considered two different types of hazards. All homeowner insurance policies exclude coverage in the event that damage was caused by flooding. When two or more acres of normally dry land or two or more properties are swamped by water, flooding has occurred. If a washer machine hose breaks or rain enters the home through the roof or broken window, water damage has occurred and coverage is provided by a homeowner insurance policy.
Compensation for damage caused by flooding is provided by a flood insurance policy. Unlike a homeowner insurance policy which is offered by private enterprise, this type of policy is available from the federal government. The National Flood Insurance Program (NFIP) is the government entity which provides these policies. NFIP is administered by the government through the Federal Emergency Management Agency (FEMA). NFIP works through private insurance companies to assist in making flood insurance policies available to property owners and renters. The private insurance companies utilize property and casualty insurance agents to sell the flood insurance policy to property owners and renters. The cost of the policy for a specific property does not vary from company to company or agent to agent. The primary factor that determines the cost for a policy is the location of the property and its risk for flooding as determined by NFIP. Flood maps are utilized to predict the risk for flooding in a particular geographic area and the specific elevation of a property further determines the level of risk. Continue reading ‘A Flood Insurance Policy is Often Misunderstood by Homeowners and Renters’ »