According to Federal Emergency Management Agency (FEMA) 90% of all natural disasters involve some type of flooding.
The average dollar value of damage when flooding occurs is $43,000
Most standard homeowner and renter’s insurance policies don’t include flood insurance. For most people, in order to have flooding coverage, a separate policy is required.
If you have a mortgage that’s backed by the federal government, and your risk for flooding is at least 1% (for any given year), you’re required to have flood insurance, otherwise, the choice is between you (and possibly your lender).
FEMA did away with “Flood Zones,” at least kinda sorta. Now, property is listed as the percentage of chance for flooding in any given year. Also, to many property owners’ surprise, about 25-30% of flood claims paid out are for property that’s normally considered in a “flood zone.”
The soonest effective date for flood insurance is 30 days after purchase. That means, if the water is about to come in your home, you’re almost certainly too late. That means, advance planning is essential for having insurance coverage in place before the flood comes rolling towards your property.
As with most things, there are exceptions to the rule, for example:
- If your building is newly designated in a high-risk Special Flood Hazard Area, and you buy flood insurance within the 13-month period following a map revision: One-day waiting period.
- If you buy flood insurance in connection with making, increasing, extending or renewing your mortgage loan: No waiting period.
- If you select additional insurance as an option on your flood insurance policy renewal bill: No waiting period.
- If your property is affected by flooding on burned federal land, and the policy is purchased within 60 days of the fire-containment: Possible waiver of waiting period.
If the area you live in, or more exactly, the property you want coverage for, participates in NFIP, you can buy affordable flood insurance that insures a single-family home for up to $250,000 and your personal property inside up to $100,000. Renters can cover their property also for up to $100,000. Non-residential property owners can insure a building up to $500,000 and contents up to $500,000
Keep in mind, that sometimes, wind can cause rain to come into your home in such a way that causes “flooding,” which a real “gotch” for those on hills that think flooding will never happen to them.
Find out if your property or potential property is at a low, medium, or high risk area by searching FEMA’s website at https://msc.fema.gov/portal/search and add in your address and you will find out quickly what any given property’s status is.
What is a flood?
As a general rule, it’s surface water from any source, not including seepage, sewer backup (unless it’s already part of a general condition of flooding), and occurring in AT LEAST two acres or two or more properties. The properties don’t have to be neighbors with each other.
Can include mudflow, including a river of liquid and flowing mud. Think of milkshakes moving along to lower ground with mudflow.
Flood insurance is written through private insurance carriers, who may have an agreement with FEMA, albeit FEMA doesn’t directly write flood insurance policies.
Some policies are subsidized by FEMA based on when, where, and how the policy was written.
Some types of contents have limits, including no coverage for cash in most cases. So, that stash of cash you have hiding in the bed mattress isn’t likely covered. Other personal items have limits of flood coverage including jewelry, furs, and electronics.
Flood insurance will cover essential systems—like electrical, air conditioners, fuel tanks, water pumps, etc.—appliances, carpeting, and some personal items including clothing, furniture, etc., not stored in the basement. The key here is if the property is below or above grade. In other words, is the property in the basement (technically, “below grade”).
Not everyone who should have flood insurance thinks they need it. For example, when Tropical Depression Florence hit the coast of North and South Carolina, of the estimated seven million homes impacted, only about 340,000 properties had flood insurance.
Many homeowner and renter insurance agents aren’t up to speed on flood insurance. FEMA certifies agents that are qualified to speak about and discuss flood insurance. Agents at 1 Reason Insurance go through the training so we’re qualified to speak to homeowners about this important coverage.
Robert Weinstein is a husband, dad, stock market junkie, real estate broker, and of course…Insurance agent. Interests include my family, economics, marketing, technology, real estate, finance/investing, history, and Asia.
Robert’s insurance expertise includes having the designation of Certified in Long-Term Care (CLTC) and assist in asset protection for families with members entering retirement.
Robert is also an accomplished syndicated writer whose work can be found in TheStreet, MainStreet, CNBC, Forbes, Yahoo Finance, Seeking Alpha, MSN Money, The Money Show, Stock Saints, Motley Fool, Fidelity, Minyanville, RealMoney Pro, and many national and international newspapers.