Volume 4 Number 51
December 21, 2007

THE BASICS OF FLOOD INSURANCE

According to the Federal Emergency Management Agency (FEMA), floods are the most common, and most costly, natural disaster. Floods can happen anytime and anywhere, and they can happen fast. Also, the damage is not covered under a standard homeowners policy. The National Association of Insurance Commissioners (NAIC) offers some important tips on flood insurance to help you prepare.

What is a flood?

A flood is an excess of water (or mud) on land that’s normally dry. The National Flood Insurance Program (NFIP) defines flood to be 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; unusual and rapid accumulation or runoff of surface waters from any source; 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.

What is Flood Insurance?

Flood insurance is a special policy that is federally backed by the NFIP and available for both homeowners and businesses.
You can buy flood insurance for your home or business regardless of whether the property is in or out of a floodplain, as long as the property is located in a participating community.
You may buy flood insurance covering up to $250,000 of flood damage to your home. A standard flood policy will cover structural damage, including damage to the furnace, water heater, air conditioner, floor surfaces (carpeting and tile) and debris clean up.
For an additional premium, you also may buy flood coverage for up to $100,000 of damage to the contents of your home.
Coverage is available for up to $500,000 for non–residential buildings and their contents.

How Much Does Flood Insurance Cost?

According to FEMA, the average homeowners flood insurance premium is a little more than $500 a year.

Premiums for flood insurance will vary depending upon your risk level for a flood loss, the amount of coverage you choose, the type of coverage you need and your deductible.

How Can I Buy Flood Insurance?

You can purchase flood insurance for your home or business regardless of whether the property is in or out of a floodplain, directly from your property and casualty insurance agent, or insurance company if your community participates in the NFIP. To find out if your community participates, visit www.fema.gov/fema/csb.shtm.

Your insurance agent or insurance company also can confirm whether flood insurance is available to you and what it would cost.

Plan Ahead — Waiting Period

It is very important to plan ahead. A flood insurance policy normally will not go into effect until 30 days after you purchase the policy.