Questions To Ask An Agent Before Buying A Flood Insurance Policy

Posted on: 3 November 2014

No matter where you live, it's a good idea to have a flood insurance policy in place. However, this is especially true if you live in an area where flash floods are common or annual rainfall amounts are high. After all, you may not realize it, but your homeowner's insurance policy alone likely doesn't cover flooding. Before you purchase just any flood insurance policy, however, there are some questions you should ask your insurance agent.

Do They Participate in the Community Rating System?

You can save some time and hassle on your part by simply asking your insurance agent whether or not your neighborhood participates in the Community Rating System (CRS). This refers to communities that keep elevation records on file for all homes and commercial buildings in the area. Since your insurance agent will need a copy of your home's elevation information in order to issue you a quote, you may be able to save yourself the cost and hassle of obtaining this certificate by having your agent obtain a CRS copy from your municipality office.

Does Your Home Qualify for a CRS Rating Discount?

Depending on your home's CRS rating, you may or may not be entitled to a substantial discount on your flood insurance. Your home's CRS rating essentially reflects what the elevation of your home's lowest floor is. Insurance companies often vary on exactly what the elevation rating needs to be in order for the policyholder to take advantage of the discount, but it's a good idea to ask the agent what their criteria for the CRS rating discount is and whether or not you qualify for it.

Does the Policy Cover Cost Value or Actual Cash Value?

Finally, before you purchase a flood insurance policy, you'll want to find out whether your policy will cover replacing damaged items in your home at cost value or actual cash value. What's the difference? Well, replacement at cost value means that your insurance company will pay to replace the damaged item with one as similar to the original as possible. With an actual cash value policy, on the other hand, the item is only replaced based on what the home owner could sell the item for (before damage occurred). Generally, it's best to select a policy that offers replacement at cost value rather than actual cash value, but you may want to consider which option best suits your needs.

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