Properties in South Florida are at risk of floods as it sees numerous thunderstorms, rain showers, and more year after year. That’s precisely why, if your property is in South Florida, you need to purchase flood insurance. It’s the only way to guarantee that you won’t end up paying with your own money, should your property be damaged due to flooding.
Below, you will find everything you need to know about purchasing flood insurance for your South Florida single-family home:
What Is Flood Insurance?
Flood insurance protects your investment property from damage due to “inundations,” such as a river that overflows its banks, a storm surge, a rainstorm that causes a flood, and more. It is a separate insurance plan that you need to pay for, as it is uncommon for insurers to include flood in their standard policies.
Do You Need Flood Insurance?
The short answer is yes. Homeowners should add flood insurance to their insurance plans if they don’t want to pay for repairs out of pocket. Even if your property is insured via landlord insurance, your insurance plan will not cover the costs of repairs if the damage is due to flooding. If you don’t have flood insurance, you’ll have to pay thousands of dollars every time your property is flooded.
What Does Flood Insurance Cover?
Flood insurance is purchased under the federal National Flood Insurance Program (NFIP). The program comes with two types of coverages:
- Building Coverage. This pays for repairs if the structure of your property, such as the walls, water heaters, sump pumps, and more, is damaged due to flooding. It covers up to $250,000.
- Contents Coverage. This pays for flood damage to the things inside of your property (i.e. the things that you own), such as computers, dishwashers, dryers, furniture, and more. It covers up to $100,000.
It is worth mentioning that the NFIP’s contents coverage is based on an “actual cash value” basis. In other words, you’ll be able to get a payout based on the worth of your belongings at the time of the flood. If floodwaters destroy your dishwasher beyond repair, your insurance won’t be able to buy a brand-new one, but compensate you for a dishwasher of a similar age and state. Although you purchased your dishwasher for $900 in 2019, due to wear and tear, it will no longer be worth $900 now.
If you’re worried that the NFIP’s contents coverage is not enough to cover the cost of your things, you can purchase flood insurance from a company that isn’t associated with the NFIP. A property management company can point you in the right direction.
What Isn’t Covered By Flood Insurance?
Do note that flood insurance does not cover every instance of flood-related damage. In general, a flood insurance policy can only cover damage due to rainwater that gets into the property. Therefore, if your property is flooded due to an overflowing tub, it won’t be eligible. This, however, may be covered by your homeowner’s insurance policy.
Bear in mind that the NFIP does not cover flood damage done to basements. This is because basements are flood-prone, particularly in some states such as Florida. So, if your basement’s drywall is damaged, or if your belongings in your basement are destroyed, you won’t be compensated by your insurance policy.
What Factors Affect Your Flood Insurance Policy?
Insurance companies base your premiums on certain factors, such as:
1. How Flood-Prone Your Property Is
Whether or not you purchase flood insurance from the NFIP or from an independent insurance firm, the amount you’ll need to pay will depend on how flood-prone your property is. For example, if your property is next to a river, you can expect your insurance policy to be a bit more expensive. Similarly, if your area is known for flooding, get ready to pay a premium price as the insurer will “tag” your property as risky.
2. Cost to Rebuild
How costly is it to repair a property in your area? Insurance companies will look at the current cost to repair, replace, and rebuild, and base your monthly payments on that. Homeowners in areas where the cost to repair is substantially low (including labor costs) will be able to benefit from a lower rate.
3. Flood Preparedness of Your Community
If your neighborhood is doing something to mitigate flood damage, you may be eligible for a lower rate. A property management firm should be able to aid you in finding out what your neighborhood is doing to mitigate flood-related damage.
4. Your Deductible
A deductible is an amount subtracted from your policy that you pay for with your own money. As a rule of thumb, the greater your deductible, the lower your premium will be.
How Much Coverage Should You Get?
It’s a good idea to get coverage that’s equivalent to the cost to repair or replace your property. For contents coverage, try to estimate how much the most valuable items in your home currently cost – do not include items that aren’t that important. For instance, if you find that your personal property costs around $40,000 in total, your flood insurance should have $40,000 in contents coverage.
Ultimately, it is up to you to decide how much flood insurance you want and need. If you want your insurance to cover everything, you’re going to need to get more coverage.
Is Flood Insurance Required?
If you are purchasing a home in a flood-prone area, your insurer may require you to purchase flood insurance. Furthermore, if your property was financed by a government-backed program and your property is in a flood-prone area, you will be required to get flood insurance by law.
Protect Your Property From Floods With Luxury Property Care
Flood insurance isn’t the only way to protect your property. Through proactive property management, you can safeguard your property from Florida’s floods. If a rental property is affected by the flood, there is landlord responsibility for flood damage. A property management company such as Luxury Property Care can implement the proper measures to lower the risk of flood. That way, you won’t only be able to protect your property, but you’ll also be able to lower your premiums.