Flood insurance has been a hot topic lately, especially in the wake of Hurricane Sandy. Most people aren’t aware – or weren’t until after the storm — that their homeowner’s insurance policy does not cover flooding. Flood insurance is a separate policy issued by the government through the National Flood Insurance Program (NFIP). A flood insurance policy is required by lenders if the property lies within a flood zone as determined by maps drawn up by the Army Corps of Engineers.
A standard issue flood insurance policy is a ‘one peril policy’ that pays for physical damage to the insured property up to the replacement cost or actual cash value of the damages or the policy limit, whichever is less. There are two types of coverage: Building Coverage and Contents Coverage. Contents Coverage must be purchased separately. The amount of coverage varies by type of property. Here is a breakdown. Continue reading