How does flood insurance work?

When flood waters rise, many are caught without knowledge concerning their insurance, and what is covered.  For those who think that they can purchase insurance while the waters are rising, that may be great for the future, but it usually takes 30 days before the policy can be active.  Here is some basic knowledge below.

1. “Flood insurance is intended to restore a covered loss to its pre-flood condition, less the deductible. Excluded items, such as a pier, landscaping, etc. are not covered under the current policy.” More FAQ can be seen at this FEMA site.

2. Most Home Owners Insurance policies don’t cover flood damage.

3. Flood insurance is backed and supported by FEMA (Federal Emergency Management Agency) regardless of who you purchase the insurance through. State Farm and the like merely handle the paper work and sell the insurance.

4. Flood insurance, through FEMA, can only be purchased in the US if your community participates in the NFIP (National Flood Insurance Program)

5. Your home must also sit in a designated flood plain area zoned by your community to purchase this insurance.

6. There are also two different areas of flood insurance that you can purchase.  Structure insurance, and personal contents, both with their own deductibles.

7. For some, there is a slim possibility of purchasing private flood insurance, but from what I have researched, it is difficult to find.

You can read much more about it here!

So if your home met these criteria, and you purchased the insurance, what now? How are the details worked out. The main key is to take action as quickly as possible.

1. Document the damage as completely as possible before, during, and after clean out.

2. You don’t have to wait for the claims adjuster to reach you to start cleaning up.  Put your call into your insurance agent ASAP though to begin the process.  Some will see and adjuster quickly, others have waited up to 3 months to see one.  That is where the documentation comes in.

3. You can pay out of pocket for cleanup and restoration, water heater eg., but keep all receipts.  My State Farm agent said these will play a part in getting a refund. Some will want to perform work immediately if they can still occupy their main living floor.

4. This is a big one, if any wall cavity is opened up, before recovering you need to have a city building inspector visit the property.  You will either have to pull a homeowners permit, or hire a licensed contractor to pull the permit.  Don’t cover up walls without this in place.  A trade permit may be necessary for any new wiring, plumbing, or HVAC work.  Consult your licensed technician for more info, or call the city permit office.

5. A claims adjuster, who typically is a 3rd party contractor, will come out and deem your property an entire loss or salvageable.  It seems that no checks will be written to the homeowner at that point.  Feel free to let me know if your insurance company performs in another way. The only way to be reimbursed personally, is to have already paid for items covered out of pocket, and submit the receipts for reimbursement.

6. At that point, select either a preferred vendor through your insurance agent, or select one of your own.  It doesn’t seem that you will have to go through a multiple bid process.  Just put your selected contractor in touch with the insurance agent, and the claims adjuster.

7. Lastly be patient.  The amount of work and material flowing into these disaster areas will be along pipelines which aren’t accustomed to this amount of traffic.  Choose a contractor who you can relate to, who you can get in contact with, and is reputable and then buckle in for the ride.

What do I do if I don’t have flood insurance.  Read this.



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One Response to How does flood insurance work?

  1. psjharrison May 19, 2010 at 9:51 AM #

    I leave in Florida and have homeowners insurance which covers hurricanes; and have flood insurance as well. My question is….. if your home is hit by a hurricane and suffers from flood from the hurricane, how does both your homeowners and flood insurance carriers cover the damages in conjunction with one another?

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