If you are planning and looking forward to buying a house, then along with a plethora of things you need to look into, a home insurance policy is one of its most pivotal aspects.
There are quite a few reasons and details that every home buyer must know beforehand to get a fantastic home deal and make a wise decision regarding where to buy the house and which home insurance policy to take so that everything such as floods, earthquakes, fires, etc. is covered.
So, if you have been wondering what to know about home insurance policies covering floods and how much flood insurance do you need, then this article has got you covered.
What are the 7 Best things to know about Flood Insurance?
1. Know the Flooding zone your house is in
There are different flooding zones classified by the governments and can be easily identified and located once you look up the federal emergency management agency map.
The insurance that you will and the cost of flood insurance can vary greatly depending on what letter your zone is designated with.
Let us provide you with the gist of the flood zone map so that you know something before diving deep into the terms and conditions of your standardized insurance plan.
- A and V zone – are high-risk areas implying have a greater probability of flood.
- B and X zone– these zones include areas of moderate risks.
- C and X zone– these areas have minimal risk or are not very prone to flood hazards.
- D zone includes an area that is yet to be determined and classified depending on their flood risk probability.
2. Standard Building Insurance plans do not cover Floods
Suppose you are genuinely new to the field that most of the Indian home buyers are.
In that case, you might not know about, think, or even consider buying flood insurance until and unless you were told or advised by your property dealer or even the institution that is providing your mortgage.
If not always, our standard home insurance plan never includes the cost if there is ever flooding damage, and when the homeowners get to know about it is mainly after the damage has been done. We don’t want you to make the same mistake.
That’s why one needs to know that their standard home insurance will not cover flooding damages until, and unless mentioned especially, that they will.
3. IRDAI has introduced a Standard Home Insurance which covers Floods
The Insurance Regulatory And Development Authority of India (IRDAI) is known to provide some kind of flood insurance; an initiative comes under the National Flood commission that is run by the Ministry of Agriculture and Irrigation.
Though this flood insurance is created by the Central Government of India and the burden is met by the government, however, the flood insurance policies are sold through the private insurance agencies who work as intermediaries between the government and the consumer.
In 2021 IRDAI has introduced a Standard Home Insurance Policy, known as Bharat Griha Raksha, which covers the risks associated with general calamities such as cyclone, flood, fire, earthquake, etc.
Bharat Griha Raksha also covers general home contents such as furniture, electrical equipment, etc along with the home building.
There is no need for separate declaration as 20 percent of the total sum insured for the home building, subject to a maximum of Rs 10 lakh, will be covered in the general home content.
You can also opt for a higher sum insured for general home contents by declaring the details.
4. What determines the cost of Flood Insurance?
Though the cost can vary depending on the N number of factors, so does the coverage provided either by the government or private agency.
Let’s look into some of the aspects that determine the cost of flood insurance so that you know what house to buy along with which insurance.
Though some people would think that areas with high flood risk should be ignored at all cost, so if you don’t have flooding insurance, even areas with minimal flooding risk can be the worst decision you made by not taking flood insurance even though you were told you don’t need one.
Now let’s look into the points that determine the cost of flood insurance.
- The year of construction of the building
- Type of flood zone it is located in
- Floors building has
- Occupancy of floors
- The listing of building
- Areas it is surrounded by
- Deductibility of various things
5. Do your own Research for Home Insurance Policies and Plans
This can be one of the most crucial parts.
Though you can ask the property dealer all the questions you want to, you may not be asking the right questions if you don’t know enough.
The video (in Hindi) above will guide you which Home Insurance policies you can buy that cover floods, earthquakes, etc.
One may think that areas with minimal risk of flood-prone areas in India map are undoubtedly safe.
They don’t need flooding insurance but believe it or not, flooding can happen almost anywhere near a river or a coast, and even the driest places have experienced floods.
One of the most crucial parts is having the area or property that has been flooded before, and if the answer is yes, you know what to do.
6. Mitigation can be optional
You can’t entirely and mitigate a property from being flooded because it’s inevitable that you will face damage if the flood happens.
Still, you certainly can minimize the adverse effects of it.
There are quite a few ways in which mitigation can be done of particular property that will depend on the nature of the property and the topography of the surrounding area, and various other factors that make it a high, moderate low-risk zone.
7. The things that are not even covered by flooding insurance
Though considering what we are talking about, this may sound absurd, but yes, even after you have flooding insurance, some things are either directly or indirectly caused by floods but still will not be covered by your flooding insurance:-
- The flooding insurance will not cover the mold that will grow or damage either the ceiling, furniture, or flooring of the house that originated due to moisture in the air or excessive humidity.
- Landslide movement that damages the property even if it was due to flood will not be covered by the flooding insurance even though it seems to be directly the reason for the flood.
- The expenses that you will have to pay for staying in a rented place while you get fixed will come out of your pocket and will not be covered by your flooding insurance even though the damage is getting covered and you are displaced due to maintenance.
Above is all what you have to know about Flood Insurance coverage in your home insurance policy or plan.