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While basic home insurance is considered essential for most homeowners, many choose not to purchase additional optional flood insurance, assuming that they will never experience flood damage or will be covered anyway if they do. Since a home is typically the largest investment a person can make, securing it against even unlikely events is advisable and worth the relatively small additional cost. Home insurance with flood cover is advisable for any homeowner, whether a mortgage is held on the property.
While flooding is far more likely in designated flood areas, typically close to rivers, streams and wetlands, in reality flooding can occur almost anywhere under the right conditions. It is estimated that up to a quarter of insurance claims for flood damage come from homes located in areas designated at a low flood risk. When homes are located in areas determined as high flood risks, most mortgage lenders will mandate home insurance with flood cover or supplemental flood insurance, as will any lender providing loans secured by the government.
For homeowners living in areas unlikely to flood, there are more affordable options than traditional flood insurance. Many people choose what is known as a preferred risk policy, which provides coverage for flood damage at lower rates due to the low chance of flooding in the area. Prices are determined according to the size and contents of the structure and whether there is a basement on the property. A local insurance agent will be able to provide the most accurate information about the amount of coverage necessary.
When determining how much home insurance with flood cover is necessary, one of the first steps is to determine where the home is located on the government flood hazard map. This map is available through the National Flood Insurance Program via their Web site as well as through local home insurance agencies. Areas at high, moderate and low risk for flooding based on average rainfall, river flow, topography and other contributing factors are all shown on the map. It is updated yearly as changes in weather patterns and communities occur.
Many homeowners believe that if they are in a low risk area, supplemental flood coverage is not necessary since the government will provide aid in the unlikely event of a flood. In reality, this will only happen if the government declares an official disaster in the area, and often federal aid is provided in the form of loans that must be repaid over time. Home insurance with flood cover will eliminate the need to rely on external aid in the event of property damage and is a relatively small investment in relation to the value of one's home.