Buying Flood Insurance
December 29, 2023

Buying Flood Insurance

Buying flood insurance may be one of the most important decisions you make for your property, especially if you are in an area where flooding is a costly risk. As you make the decision to buy this type of coverage, it also helps to have as much information as possible about the types of policies available to you. Flood insurance policy details matter. For example, you need to consider how you will be reimbursed for your losses should a covered incident occur.


Replacement Cost and Actual Cash Value 

Flooded StreetMany types of flood insurance, including those policies from the National Flood Insurance Program, will break down coverage based on replacement cost and actual cash value. What’s the difference? 

Replacement cost will provide you with a payout that is enough to cover replacing the item at today’s prices. For example, replacing a damaged washer and dryer may require spending a significant amount more than the current worth of these appliances in your home. It ensures you have enough to go out and buy a new washer and dryer. 

Actual cash value is a bit different. A policy with this type of payout will pay out only the cash value of the items you own based on their condition before the flood occurred. That washer and dryer may be only worth a few hundred dollars in actual value, which may not be enough to cover replacing these items. 

Depending on the type of flood insurance you have and where it is from, you may need to make adjustments to the policy to meet your actual needs. Policies from the National Flood Insurance program provide up to $250,000 for structure and $100,000 for your belongings, in most cases. However, these policies often provide replacement cost coverage only for the structure of the building. Possessions, on the other hand, are paid based on actual cash value. 

By working with your flood insurance agent, you can better understand the risks you face and the opportunities for minimizing the financial losses you face. Many policies can be customized to meet your needs and give you ample protection against risks. Ensure your flood insurance, as well as other types of property insurance, cover as much as necessary to keep you safeguarded. 

Get the protection you need. Call Clarion Pacific Insurance Services at 831-337-4661 for more information on Santa Cruz flood insurance. 

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