Choosing More Coverage

Posted on: 3 July 2018

Flood insurance is typically a separate coverage from standard homeowner's insurance coverage. This means you need to minimize your costs for both types of coverage if you don't want to overpay for your home's protection. When it comes to flood insurance coverage, knowing the factors insurance companies use to calculate rates may help you manage your costs. Here are some of those factors.

Your Location

By far, your location is the premier factors that determine how much you pay for flood insurance. This makes sense since location determines the flood characteristics of flood levels every year. There are high-risk areas, moderate risk area, and low-risk areas as designated by insurance providers, and they all attract different rates, with low-risk areas being the cheapest.

You can't change your location designation if you have already bought a home. However, if you are in the market for a home, make sure you understand the flood risks in your neighborhoods of interest so that you don't end up with monstrous flood insurance rates.

Your Home Construction

The nature of your home's construction determines your home's flood exposure and the degree of flood damage you may suffer in case of a flood. For example, having flood openings under your house may entitle you to lower rates than having a home without such an opening. The elevation of the home also comes into play; an elevation above the established flood level in the neighborhood may attract low flood insurance rates.

Your Home's Age

Aging homes are more likely to be damaged during a flood than relatively new homes. This is because the materials in old homes have endured years of weather damage and natural deterioration (wear and tear). It is not uncommon for a raging flood to sweep away an old home and leave relatively newer properties standing in the same area. Again, this is something you should strongly asses if you are in the market for a home.

Your Insurance Carrier

There are two main categories of flood insurance providers; the government and the private sector. The government policies are usually subsidized and attract higher rates while the private offers attract full market prices. However, before making a choice based on cost alone, you should consider that the National Flood Insurance Program (NFIP) may have lower coverage limits and more exclusions than private flood insurance programs.

Hopefully, you can leverage the above information to help you buy an affordable flood coverage. If this is the first time you are shopping for flood insurance, consult a company like Amberg Insurance Center Inc to help you get the best coverage at a reasonable rate.