Amid Hurricane Season and following the aftermath of Hurricane Barry, it is a good time to remember that flood insurance is an important part of Louisiana home ownership. In Barry alone, flood loss for residential and commercial properties in Louisiana is estimated to be between $200 million and $400 million, including both storm surge and inland flooding.
Here are some important points to know before undertaking your flood insurance journey.
Separate From Homeowners Insurance
Flood insurance is usually separate from homeowners insurance. To get flood protection, you must buy a separate policy from the federally funded National Flood Insurance Program (NFIP) or a private insurer. Louisiana is the largest recipient of funds from the NFIP.
According to the Vice President of Personal Lines at American Property Casualty Insurance, Don Griffin, you must also buy separate coverage for your possessions. Generally, your possessions are not automatically included in the flood policy.
Purchase Flood Insurance for Property and Contents Separately
When deciding to purchase flood insurance, you need to purchase it separately. A flood insurance policy through the NFIP can provide maximum coverage of $250,000 for property and $100,000 for contents. It is important to note that property and contents coverage must be purchased separately, even though they may form part of the same policy.
Flood insurance for the contents of your home generally pays out the cash value. This means that the insurance pays out the cost to replace the damaged or lost property based on its actual, depreciated value as used goods. If you are thinking about insuring your single family home that is your primary residence, you may be able to opt for replacement cost coverage. Replacement cost coverage is the cost to replace the damaged or lost property with new property, without regard to depreciation.
Flood Policy Takes 30 Days to Bind
Another difference in flood insurance policies as compared to other insurance policies is that the federal government sets flood insurance pricing. There is also a 30-day waitingperiod. You must wait 30 days after your initial purchase of a flood insurance policy prior to the policy going into effect. This means that the longer you wait to look for flood insurance for your home, the greater the risk of loss is present before your policy actually going into effect.
With this information in mind and Louisiana’s summer and fall rainy season looming, make sure to buy your plan ahead of time.