Flood Insurance

Flood Insurance Cover: How to Escrow Your Claims

It is very important to understand what your flood insurance actually does, and doesn’t do, before deciding if it is right for you or not. Some homeowners mistakenly believe that they are buying enough flood insurance to cover their home and belongings, when actually the coverage amounts are so much lower than they might realize. The following is a brief run down of what you actually need to know about flood insurance to make an informed decision.

Flood Insurance – Be Escrowed in a Flood Zone When you purchase flood insurance, it is possible that you will not need to escrow in a flood zone. Most flood insurance policies work on the basis of either being in a flood zone or having flood insurance coverage. Therefore, it is possible to purchase a flood insurance policy that does not require any escrow at all. Here are several things which flood insurance actually covers:

Appliances: Any electrical appliance damaged by a flood will normally be covered by the flood insurance. In addition, any other damaged appliance such as a stove, refrigerator or bath tub should be covered. Items in the home that can be considered damaged personal property will also be covered under some flood insurance policies. This includes such things as clothing, furniture and antiques. Furniture is generally covered up to the value of the furniture, but this might not be the case for antiques and other items. In order to determine the true value of these items, you will generally need to obtain a flood insurance policy that covers them.

Structures: Certain structures such as houses and apartment buildings are required to have a National Flood Insurance Program or NFIP in order to be classified as a high risk area. To qualify for a flood insurance policy on these types of structures, the owner must state that such structures are located in a flood zone. In addition, such structures must be built according to a standard set of rules that the NFIP specifies. If you own an apartment building or house and it is located in a flood zone, it may benefit from a special policy that offers coverage for such damage only. This type of coverage is not available through most normal insurance companies and requires the purchase of a flood policy to protect against floods.

Vehicles: You can often purchase a flood insurance policy that specifically covers vehicles. Depending on where you live, you should have a special flood insurance policy set up for vehicles. These policies are usually offered by insurance companies that deal solely with flood zones and you will need to meet certain criteria before qualifying for one. For example, your vehicle may need to be an older model and still pass regular safety inspections. The policy may also restrict the use of certain parts and require that the tires and wheel alignment be in good condition.

Elevation: Another factor that is taken into account when setting up a flood insurance policy is the elevation of the property. Usually, buildings are set on a grade or a surface level, which means that the elevations will differ during different seasons. If your home or apartment is located on a slope, your coverage might increase each year as the level rises. The cost of the policy will vary with the difference in elevation between the regular base flood and the elevations caused by the storms.

Vehicles: One final factor that may affect your flood insurance premiums is the elevation of your home or apartment. If your home or apartment is located on a slope, there is a chance that your car will flood during the storm and that it could create significant damage to your vehicle. Insurance companies usually set high-risk flood insurance premiums according to the risk of damage to your vehicle. If you live in an area with a high-risk flood, you may not qualify for lower premiums than someone who does not live in a flood zone. So if you are paying on flood insurance for your car, make sure that it does not have a clause that would keep you from buying flood insurance if you reside in a flood zone.

You can see how changing some factors like location and elevation can dramatically change the way that you pay for your flood insurance premiums. There is still time to get the changes you want made before the policy comes due, and by shopping around you can often save yourself hundreds of dollars per year. When shopping for a new home always shop for the best value possible. Once you purchase your home, always make sure that your homeowner’s insurance policy contains full Escrow funds.

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