When a flood strikes ...: how to protect your home with the proper coverage.

Purchasing a home is one of the greatest joys a person can experience. But have you taken the necessary steps to protect your beloved investment from the No. 1 natural disaster--flooding? Whether you think you need it, or live in an area not susceptible to flooding, flood insurance is vital because flooding can damage your home and your financial future.

According to the Federal Emergency Management Agency in Washington, D.C., a flood is defined as a temporary situation where two or more acres of normally dry land, or two or more properties (one that is yours), are partially or completely covered by water or mud. Floods happen in all 50 states and homeowners insurance covers many hazards, but flooding is not one of them. Hurricanes, winter storms, and snowmelts are common causes of flooding. If you do not have flood insurance and your home is flooded, you may qualify for a low-interest disaster loan. However, to be eligible, the president must first declare a federal disaster.

Ed Pasterick, senior adviser of the National Flood Insurance Program, a division of FEMA, estimates that 20,000 communities across the U.S. and its territories participate in the NFIP, with annual rates as low as $400. The NFIP is a federal program that allows property owners in participating communities to purchase insurance as a protection against flood losses in exchange for adopting and enforcing floodplain management regulations to reduce future flood damages. About 4.6 million policies have been issued across the U.S. Last year alone, approximately $20 billion was paid in claims.

If you are not located in a floodplain (high-risk) area, which is defined as any land area susceptible to being inundated by floodwaters from any source, you are still at risk In fact, 33% of flood claims are for properties located outside of mapped high-risk floodplain areas, according to David Passey, FEMA's public affairs officer for region VI in Denton, Texas. "People make decisions too often based on someone else's experience and not on scientific evidence," says Passey. "We always get that historical perspective from people regarding what their grandparents, dad, or aunt experienced, and how they lived in the same area for 20 or 30 years and it never flooded. People need to understand the risk and make informed decisions."

Whatever you do, don't wait until you need it. "There is a standard 30-day waiting period before your policy becomes effective," says Baxter Bouchillon, an agent for State Farm Insurance in Covington, Georgia. "Be proactive, contact your agent to review your coverage, and ask questions."

HOW MUCH COVERAGE IS ENOUGH?

A standard flood insurance policy covers a single-peril (flood) and pays for direct physical damage to one's insured property. NFIP offers homeowners coverage for building property up to $250,000 and personal property (contents), up to 100,000. Businesses can insure up to $500,000 on the building, and up to $500,000 on its contents. You have to purchase contents coverage separately for personal belongings such as clothing, furniture and electronic equipment, curtains, books, etc. If you rent, you can purchase a low-cost "contents-only" policy with coverage up to $100,000. "Buy as much coverage as you can afford, up to the actual replacement value of your house, what it costs to repair your house," says Bouchillon. To assess your flood risk, visit www.floodsmart.gov, click on "What's Your Flood Risk?" and enter your address.