Flood Insurance
Floods are America’s #1 disaster!
Flood coverage is not included in a homeowner’s policy. Separate flood coverage must be purchased to protect your home from flood damage (water damage from a burst pipe inside the home is not considered flood and should be covered by your homeowner’s policy).
Here is how "flood" is defined by the National Flood Insurance Program:
"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 (at least one of which is the policyholder's property) from:
- Overflow of inland or tidal waters; or
- Unusual and rapid accumulation or runoff of surface waters from any source; or
- Mudflow; or
- Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above."
So, in plain English, a flood is an excess of water (or mud) on land that's normally dry.
Floods often happen when bodies of water overflow or tides rise due to heavy rainfall or thawing snow. But you don't have to live near water to be at risk of flooding. A flash flood, which can strike anywhere without warning, occurs when a large volume of rain falls within a short time.
More and more buildings, roads and parking lots are being built where forests and meadows used to be, which decreases the land's natural ability to absorb water. Coupled with changing weather patterns, this construction has made recent floods more severe and increased everyone's chance of being flooded.
Dangerous or damaging floods don't always mean dramatic, rushing waters through the streets of your hometown. Just a single inch of water can cause costly damage to your home! Keep this in mind when you're considering flood insurance. – Courtesy of National Flood Insurance Program – www.floodsmart.gov
Facts You Should Know
- There is a 26% chance of experiencing a flood during the life of a 30-year mortgage compared to a 4% chance of a fire.
- Find out if you are located in a floodplain, which is considered a Special Flood Hazard Area. If you are, you are still eligible for flood insurance. In fact, in some cases, you may be required by law to have flood insurance. Your city or county government (start with the Building or Planning Department) has Flood Insurance Rate Maps, published by FEMA, which are available for public inspection. If your building is located in a flood zone that begins with the letter A or V, you are in a Special Flood Hazard Area.
- The average premium is approximately $400 per year depending on where you live and the coverage you choose.
- In low-to-moderate risk areas, coverage can be purchased for just over $100 a year.
- Buy as much flood coverage as you can. Primary residences insured for 80% of their value, or the maximum amounts available, get replacement cost coverage. It pays the amount needed to repair or replace most of the building elements up to the policy limits, without deduction for depreciation, once repairs are made.
- There is a 30-day waiting period from the time a policy is purchased until you are covered, with the following exceptions:
- There is no waiting period if you have an existing flood insurance policy and an additional amount of flood insurance is required with the making, increasing, extending or renewing of a loan, such as a second mortgage, home equity loan, or refinancing. Coverage is effective immediately, as long as the premium is presented at or prior to loan closing.
- There is no waiting period when flood insurance is required as a result of a lender determining that a loan, which does not have flood insurance, should be protected by flood insurance. Coverage is effective immediately, as long as the premium is presented at the completion of a loan application.
- There is a one-day waiting period when an additional amount of insurance is required as a result of a map revision. This applies when the map revision is from a non-Special Flood Hazard Area to a Special Flood Hazard Area and only if the endorsement is received within 13 months following the map revision. The increased amount of coverage will be available 24 hours after the amount of coverage is applied for and the additional premium is made.
- Flood insurance is required by law in some instances. To get Federally secured financing to buy, refinance, build, repair, reconstruct or improve structures in Special Flood Hazard Areas, you may be required to purchase flood insurance. This includes most types of mortgage loans, as well as FHA and VA loans.
- A flood insurance policy also reimburses you for actions you take to prevent flood damage. For example, costs for moving insured contents, in imminent danger of flooding, to a safe location are reimbursed up to $1,000 with no deductible. Other costs, such as for sandbags, plastic sheeting and lumber, pumps, fill for temporary levees, and wood to save the building can be reimbursed up to a limit of $1,000 with no deductible. - Courtesy of National Flood Insurance Program – www.floodsmart.gov
