With hurricane season kicking off, it’s a good time to help property owners understand their coverage options. Home insurance and flood insurance are two pivotal components of property ownership that help protect your investment. However, many homeowners often confuse the two or assume that one covers the other. While both are designed to provide financial relief in the event of damage to your property, they cover different risks and are often separate policies.
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Homeowners insurance is a type of property insurance that covers losses and damages to an individual’s house and assets in the home. It usually covers interior and exterior damage to your home, loss or theft of possessions, and personal liability for injuries occurring on your property. A typical homeowners insurance policy covers a wide range of potential perils including fire, hail, theft, and vandalism. However, it’s essential to understand that standard homeowners insurance usually does not cover damage caused by floods.
Flood Insurance is Sometimes Required to Purchase For Homeowners
Flood insurance, on the other hand, is a separate policy that specifically covers damages resulting from flooding. This could be due to heavy or prolonged rains, coastal storm surges, snowmelt, blocked storm drainage systems, or levee dam failure. In the United States, flood insurance is often provided by the National Flood Insurance Program (NFIP) but can also be purchased from private insurers. The coverage usually includes both the structure of your home and your personal property within.
While homeowners insurance is generally required by mortgage lenders and covers a broad scope of incidents, flood insurance is typically optional unless you live in a high-risk flood area. Yet, it’s a significant consideration for homeowners, given that just one inch of flooding can cause costly damage to a property. The fact that a home is not in a flood zone does not mean it’s immune to floods. According to the Federal Emergency Management Agency (FEMA), over 20% of flood insurance claims come from properties outside high-risk flood zones.
In conclusion, while homeowners insurance and flood insurance both serve to safeguard your property, they cater to different types of damage. Homeowners insurance covers a wide range of hazards but generally excludes flood damage, which is where flood insurance steps in. As a property owner, understanding these differences is essential. Assess the risks your property may be exposed to and ensure you have the appropriate coverage for comprehensive protection. It’s always better to be safe than sorry when it comes to protecting your most valuable asset – your home.