How well are you insured against flooding?

We came across this article by the Sacramento Bee that gives you an idea of what is at stake if you are not properly insured for flooding.

By Claudia Buck
The frightening images of Japan's tsunami wiping out homes, roads and entire cities are vivid reminders that a natural disaster can strike at any time.

And whether it's an earthquake, a wildfire or flooding, being covered against severe damage to your home or business is essential.

Across the United States, flooding is the No. 1 natural disaster, according to the Federal Emergency Management Agency.

And given the region's swollen rivers and the promise of heavy runoff this spring from melting snow, now's a good time to assess how well you're protected against flooding.

A basic homeowner's or business insurance policy will cover damage caused by storms, such as a leaky roof, fallen tree limbs or broken pipes.

But a homeowner's policy typically does not cover damage due to flooding, or what's known as "rising water."

Flooding – such as a levee break, a river overflowing its banks or water from springtime snow melt – is generally defined as a temporary inundation of normally dry land. For that type of coverage, you need a separate flood policy, which is provided by the federal government's National Flood Insurance Program and purchased through a local insurance agent.

"The distinction is that homeowner's insurance covers water falling from the sky; flood insurance covers water rising from the ground," said Tully Lehman, spokesman for the nonprofit Insurance Information Network of California.

In some areas, flood insurance is required, particularly in high-risk areas, such as Natomas. "In other areas, flood insurance is suggested but not mandatory," said Vince Wetzel, the Sacramento-based spokesman for State Farm Insurance. "People need to evaluate the costs and (flood) risks and decide for themselves."

What's covered

Flood insurance covers most damage to your home, business and personal property caused by temporary inundation of water. It includes mudflows, but not landslides.

covers most damage to your home, business and personal property caused by temporary inundation of water. It includes mudflows, but not landslides.

One limitation to flood insurance is basements. Improvements such as sheetrocked walls, finished floors and personal belongings in a basement are not covered by flood insurance; essential household equipment such as furnaces or water heaters is covered.

For residential policies, the maximum coverage is $250,000 for the structure and $100,000 in personal property. For a business or commercial property, the maximum limits are $500,000 structural and $500,000 in contents.

What it costs

Flood insurance premiums vary, depending on where you live and whether your home is considered at high or low risk of flooding.

The average residential flood insurance premium is about $570 per year, according to the NFIP. But homeowners in low-risk areas can purchase coverage for as little as $129 a year; those whose homes are in heavily flood-prone areas will pay $2,700 or more in annual premiums. Commercial property rates are higher. See www.floodsmart.gov for details.

And keep in mind: If you get a policy today, it doesn't go into effect until 30 days after it's purchased.

Do a home inventory

Regardless of whether you purchase flood insurance, it's a good idea to conduct a home inventory.

Regardless of whether you purchase flood insurance, it's a good idea to conduct a home inventory. Read more: http://www.sacbee.com/2011/03/20/3487277/personal-finance-how-well-are.html#ixzz1HA7U41Bn

Cliff Cottam Insurance is here to help with questions and concerns regarding your homeowners policy or other insurance options. Contact Us today at (800) 807-6871 or complete our online Flood Quote form.