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Flood Insurance Double Deductible Trap!

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One common misconception with flood insurance is people think they have one policy. The fact is that when you purchase a flood policy, you are technically buying 2 policies, one on the building, and one on your contents.

Let’s look at an example for a typical home flood policy. You have a flood and file a claim and there is $30,000 of damage to your building and $5,000 on your contents.  All of the carpet, wood flooring and drywall on your bottom floor was ruined, along with your furniture on the bottom floor.  If your deductibles are $2000, you actually owe $4,000 before they will pay out on your claim, $2,000 on the building and $2,000 on your contents.  Your deductibles for flood policies are labelled (for example) $2,000/$2,000.  Now, if you have $5,000 deductibles ($5,000/$5,000), you are out of luck on your contents.  You will pay $5,000 for the deductible on your building and they will give you $25,000 to cover the damages, but you won’t receive anything for your contents.

If you’re trying to lower your annual premium, we recommend increasing your building deductible, but keeping the contents deductible low. This can lower your premium and still make sure you are covered for smaller claims. Something like a $5,000/$2,000 deductible.

So be aware when you are purchasing your flood insurance policy, you have a separate deductible for your building and your contents.  Be prepared for this when you file a flood insurance claim.


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