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What Flood Insurance Doesn’t Cover

What Flood Insurance Doesn’t Cover

As most everyone knows, flood insurance is not covered by the typical homeowners or business insurance property policy. The solution for getting flood insurance is usually to obtain a policy through the National Flood Insurance Program (NFIP). NFIP attempted to fill a significant gap in coverage for property owners when property insurance carriers began to exclude flood coverage. Unfortunately, NFIP doesn’t cover everything. It Doesn’t Cover All Flooding NFIP has a specific defintion of a flood. It is as follows: A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (one of which is your property) from: a. Overflow of inland or tidal waters b. Unusual and rapid accumulation or runoff of surface waters from any source c. Mudflow. Per this definition, if your bathtub or toilet overflows and makes a mess of your house, there is no coverage under your flood insurance policy. If your washing machine floods the garage while you’re out running errands there is no coverage. This type of water damage may be covered under your homeowners policy, but it depends on the type of damage and how it occurred. Talk to your broker about what types of water damage may be covered by your policy. It Doesn’t Cover Everything You Own The NFIP policies do limit the amount of coverage you can purchase for your home or business. These limits are as follows: TypeBuilding LimitContents LimitOne to Four Family Residential$250,000$100,000Other Residential (Non-Condo)$500,000$100,000Non-Residential Business$500,000$500,000 It is important to note that if the replacement cost of the structure is less...
Why Is Flood Insurance So Expensive?

Why Is Flood Insurance So Expensive?

Whether it is your first time purchasing home or business flood insurance, or your renewal just came in the mail, you’re sure to have sticker shock. How can one policy covering one peril be so expensive? There are a few reasons why, and there are some things you can do about it. Location, Location, Location If you own property in a flood-prone area, your rates will be higher than in areas not prone to flooding. This can mean you are located near a water source such as a lake or river, or it could mean that you live in an area susceptible to run off or dam failure. Your flood zone is the largest determining factor in your premium. The Federal Emergency Management Agency (FEMA) defines flood zones as Special Hazard Flood Area (SFHA – zones starting with A or V), moderate hazard flood area (zones starting with B and X zones that appear shaded on the FEMA map), and minimal flood hazard areas (zone C or unshaded zone X). What can you do? Short of moving, you can check your flood zone to be sure what is on your policy is correct. FEMA is constantly revising maps in all areas. You can check your flood zone in the FEMA Flood Map Service Center. Bear in mind that the flood map link above won’t be enough to change your policy – you will need either a Letter of Map Revision (LOMR) from FEMA or have your elevation certificate updated by a licensed surveyor. The rate change most likely won’t be retroactive, but it would affect your upcoming flood policy...
Flood Insurance FAQs

Flood Insurance FAQs

Most insurance policies can be purchased through private insurers. Flood insurance, however, can usually only be obtained through the National Flood Insurance Program (NFIP). This government program has rules and regulations that are different from private insurance, and these differences can cause frustration and confusion for consumers looking for flood insurance. Below are some frequently asked questions about flood insurance and their answers. Why can’t I buy flood insurance RIGHT NOW? Flood insurance is one of those policies that people don’t think they need until they do. The storm of the century is bearing down or the levy is about to break, and those without flood insurance want to purchase it right away. Insurance is meant to mitigate accidental risk, those things that cannot be foreseen. With a flood bearing down, it is not in the best financial interest of the flood insurance carrier to sell a policy that might pay out face value before the premium check even clears the bank. NFIP has a 30-day mandatory waiting period on all new flood policies, meaning the policy goes into effect 30 days after the purchase date. They do allow for policies with no waiting period, but only in the event of a loan closing where the mortgagee or bank requires flood coverage. Buy flood insurance before you need it, so if you ever need it, it will be there for you. Why is flood insurance so expensive? The price of flood insurance depends on many factors: Your proximity to waters that may be subject to flooding (oceans, gulfs, bays or rivers). The height above sea-level where your home or...