Flood insurance

By Jakob Jelling
www.cashbazar.com

Insurance refers to a contract, which the insured entered into with an insurance company, under which all financial protection is provided against losses for person, business or organization, in exchange of a regular payment called ‘premium’. Some types of insurances are mandatory under a country’s law while some others are exclusively at the user’s disposal. Ideally, insurance cover provides a helping hand in an event of disaster as nobody can predict in advance what the prudence has in store for us.

Nowadays, insurance cover is available for virtually any damage caused by natural catastrophes. Flood insurance is one of those types that covers losses occurred due to a flash flood or hurricane. It is a special insurance package backed by the federal government, with the cooperation of private firms and local communities. One important thing to be noted here is that the flood insurance doesn’t come as a pack with home insurance. Instead it is a separate deal altogether that requires to be subscribed to separately.

Flood insurance is comparatively less expensive - the average premium amount hovers around $353 a year. Given the climatic condition that guarantees at least a dozen storms a year, it is amusing and alarming that only one-quarter of the homes in the vulnerable zone have valid insurance cover.

Generally it will take around 30 days to activate the policy, after the date of purchase. But if you run for flood insurance cover after an announcement of flood, then there is no chance to get one. After all, the insurance is their business and they simply don’t want to lose money.

One thing the customers should understand is that it is the federal government who are setting the rates, not the company themselves. Hence the premium of a policy will be almost the same. The profit for the insurance companies comes from the service fee allotted by NFIP and yes, from unclaimed policies.

It further goes without saying that the customers must make sure that they buy the policy from a company that is financially sound. The one in a poor financial stage may not be able to pay the claims timely. Also look out for the areas covered by the insurance companies. Some covers selected areas while some other players, even though covers the entire nation, and are not considered national providers.

If one’s home sits on the storm prone ocean costs or the mainland, he/she may not be eligible for the federally subsidized insurance. Areas in the North Carolina Outer Banks, selected areas in Delaware and South Carolina and sections of the Florida panhandle come under the restricted zone. Such a plan is based on the government’s policy to restrict habitation in valuable ecological regions, as a step to effectively implement the Coastal Barrier Resources Act.

For a policy holder, if his/her home is at the verge of being flooded, the person is entitled to get reimbursement up to $1,000 for damage preventing exercises. Renting storage space to safeguard your belongings, renting pumps and buying/renting sandbags and lumber to create a barricade, are all included for reimbursement.

To conclude, it is the user who is the best person to decide whether if at all to apply for flood insurance. If the person is staying in a low risky area, he can take a chance, but those staying the coastal areas ideally should have a flood insurance cover against their name. It is always better to prevent and prepare than repent and repair later.

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