Process for Flood Insurance
Typical homeowners insurance covers a variety of accidental events, especially fire and theft, which can cause damage to property. Most creditors require that home buyers get some type of homeowners insurance, depending on the state and area in which they live. There are some events, however, that do not fall under the usual homeowners insurance umbrella--large-scale events like hurricanes and floods. A separate type of insurance is required for these problems, if homeowners live in an area where they are a possibility.
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Flood Insurance Difficulties
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Flood insurance is associated with difficulties, like insurance for other major disasters such as earthquakes. Floods cause so much widespread damage that private insurance companies would have to spend large amounts of money in insurance payouts every time a flood occurred. To save money, private insurers typically refuse to offer flood insurance directly to people. Instead, they offer flood insurance through subsidized government insurance programs designed specifically for flood-prone areas. These programs come with additional qualifications but also provide one of the only ways people can get flood coverage.
Qualifying Properties
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The federal government will not cover just any property against floods. There are two general types of flood areas where insurance is available: low risk and high risk. The government is most interested in offering insurance in areas near rivers and coasts where floods are a serious danger and can do widespread damage. Communities must be rated as flood-prone areas and must conform to various building regulations. Structures that are not built above a certain flood level, or are not built with flood-proof materials, may not qualify.
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Premiums
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For properties that do qualify, the premiums homeowners must pay vary according to a number of risk factors. The year the house was built, along with its size and shape, are important characteristics. Homeowners may have some choice in deductible amounts and if they want the contents of the building covered as well as the building itself, but in flood-prone areas lenders require this insurance when creating mortgages and will charge the homeowner for insurance if they do not buy it themselves.
Claims
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When a flood occurs, a homeowner should immediately call out a claims adjuster to inspect the property and sign a proof of loss statement that guarantees the damage caused by the flood. Property owners should also be prepared to keep samples of carpet, walls and any other materials damaged by the flood. These steps must be completed within 60 days of the flood.
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