Floods Are Not Covered by Your Home Insurance Policy. You Need Flood Insurance to Protect You From the Costs of Flood Damage.

Category: Personal Insurance

Floods can happen anywhere, even if you live in an area that has never experienced a flood before. Floods are typically caused by hurricanes, overtopped levees, outdated or clogged drainage systems and rapid accumulation of rainfall. Most home and property insurance policies do not provide coverage for damage due to floods.

Congress created the National Flood Insurance Program in 1968 to help provide a way for property owners to financially protect themselves from flood damage. Flood insurance from the NFIP is available to homeowners, renters, condo owners and business owners.

The NFIP offers several startling facts about flooding and disaster assistance in the United States:

  • Floods and flash floods happen in all 50 states.
  • Most homeowners insurance does not cover flood damage.
  • If you live in a Special Flood Hazard area or high-risk area and you have a federally backed mortgage, your mortgage lender requires you to have flood insurance.
  • Just a few inches of water from a flood can cause tens of thousands of dollars in damage.
  • Flash floods can bring walls of water 10 to 20 feet high.
  • A car can be carried away by just two feet of floodwater.
  • New land development can increase flood risk if the construction changes natural runoff paths.
  • Federal disaster assistance is usually a loan that must be paid back with interest, which will be far more costly than the premiums for flood insurance.

The cost of flood insurance from the NFIP varies depending on how much insurance is purchased, what it covers, and what the flood risk of your property is. The program determines the flood risk of a property by analyzing the history of floods in the area, as well as other factors such as typical rainfall, river flow and tidal surge data, topography, flood control measures and changes due to building and development. The data is then used to create flood hazard maps that show the degree of risk for your community. These maps help to determine the cost of flood insurance for your property. Properties with a lower degree of risk will have lower premiums.

If you apply for flood insurance from the NFIP, there will be a thirty-day waiting period after you have completed the application and made the first premium payment for the policy to become effective. There is an exception to this if the flood insurance is required for a mortgage loan; in those cases the effective date for the flood insurance coverage is the loan closing date.

People who live in moderate- to low-risk areas that have federally backed mortgages are typically not required to have flood insurance. However, people outside of high-risk areas file over 20% of NFIP claims and receive one-third of the disaster assistance allotted for flooding related disasters. The bottom line: everyone should consider purchasing flood insurance.

The agents at Schoolcraft Insurance can work with you to determine the coverage options that are right for you and your property, and we will help you determine how much coverage you need. You can also visit the FloodSmart.gov to review the flood maps and find out the insurance requirements and flood risk for your area. You can also take a flood risk profile to find out what type of risk area your property is in.

One final and very important note: a typical home insurance policy will not cover expenses for sewer backup, or water that backs up through sewers or drains or overflows from a sump pump. Flood insurance from the NFIP also will not cover sewage backup. Sewage backup coverage is available from most insurers as a rider to your home insurance policy, and as with all types of insurance, the cost of coverage is tied to your level of risk. Sewage backup coverage is affordable and should be seriously considered, especially if you live in an area with an aging waste disposal system.

Do you live in a flood-prone area? Or, have you been lucky to be in a region that has been free from devastating floods? Do you have flood insurance?

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