Must-Do Insurance Decisions Before

Almost seven years to the day after Hurricane Katrina devastated New Orleans and the Gulf Coast, Hurricane Isaac, a category one storm, dumped torrential rain along its path, reminding everyone that flooding is the number-one hazard from this type of natural disaster. While electric power may be knocked out for a while, flooding has a long-lasting effect that can affect property owners for years to come.

As Isaac makes its way as a tropical storm, thousands of affected home and property owners are calling their insurance agents to begin the recovery, clean up and rebuilding. Some may be relieved to find they’re “covered” from this natural disaster, while others may be shocked to find they weren’t protected at all. 

In a report by ABC News, "Top Six Myths, Facts about Flood, Hurricane Insurance,” Susanna Kim offers some information and suggestions for property owners before Hurricane Joyce decides to make an appearance on the weather map. Informed insurance professionals can help customers wade through the myths and be prepared before disaster strikes.

1. All flooding causes are the same, and you’re covered. Not so. According to MetLife, most homeowner policies offer protection from windstorm and hail damage. However, damage from an earthquake or hurricane is not usually covered. Property owners in high-risk areas can purchase flood insurance through the National Flood Insurance Program.
    
2. A previous flood disqualifies you from purchasing flood insurance. Some people may believe buying flood insurance is a one-time opportunity and miss out on valuable protection. While you can’t get retroactive coverage, you may be able to purchase flood insurance before the next storm comes along.
    
3. Your mortgage broker has to require flood insurance. Yes and no. If you live in a high-risk area, like on the ocean or other flood plain, you may be required by your lender to purchase a separate flood insurance policy. If the damage is done, why bother spending the money on flood insurance? The federal government may offer disaster assistance to help rebuild after flooding caused by a hurricane. Property owners receiving federal assistance who experience another disaster without obtaining private flood insurance may be excluded from future federal assistance. Helping customers understand the risk of a second exposure can help save them from future financial risk as well.
    
4. Flood insurance is for high-risk areas only. Myth. The NFIP says you can get flood insurance in low- to moderate-risk areas at a lower cost. Be sure to read the fine print. Policies may cover the cost to rebuild, not current market value. Paying a higher premium to get replacement of your home may be a better investment in the long run.
    
5. Don’t wait to file a claim. Good advice. Flood loss is financially, physically and emotionally devastating. Agents can help customers by giving them the NFIP’s three-step process: First, contact your insurance agent. Next, separate what is lost from what was recovered, and document your losses with photos. Third, file documents for claims or disaster aid within the required time period. 
    
6. Choose outside assistance wisely. Public adjustors may help with the claims process, but they will take a fee regardless of how much of the work the property owner is required to complete. The article suggests hiring an accountant to assist in the process, if necessary.

The time to prepare for the next disaster is now! Clearing up the myths about flood insurance can help customers make informed decisions about the best coverage for their situation and give peace of mind whatever storms come their way.