Flood Insurance: What it is and why you need it

Flooding is the most common and expensive natural disaster, but few businesses and homeowners are adequately prepared and insured.  According the NOAA (the National Oceanic and Atmospheric Administration) floods can happen during heavy rains, when ocean waves come on shore, when snow melts quickly, or when dams or levees break. Damaging flooding may happen with only a few inches of water, or it may cover a house to the rooftop. Floods can occur within minutes or over a long period, and may last days, weeks, or longer. Floods are the most common and widespread of all weather-related natural disasters. 

Flood insurance covers losses directly caused by flooding. In simple terms, a flood is an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.

Flood insurance is separate from Home or Property insurance. It is written by the National Flood Insurance Program  (NFIP) and administered by FEMA. The NFIP has an arrangement with private insurance companies to sell and service flood insurance policies. Flood coverage is separate because floods are expensive for insurers to cover in a standard policy while keeping premiums affordable. Floods are extremely costly and very common in flood-prone areas. It typically takes up to 30 days for a policy to go into effect, so the time to buy is well before a disaster.

There are two types of flood insurance, Building Coverage and Content Insurance.

Building Coverage covers:

  • Electrical and plumbing systems
  • Furnaces and water heaters
  • Refrigerators, cooking stoves, and built-in appliances like dishwashers
  • Permanently installed carpeting
  • Permanently installed cabinets, paneling, and bookcases
  • Window blinds
  • Foundation walls, anchorage systems, and staircases.
  • Detached garages
  • Fuel tanks, well water tanks and pumps, and solar energy equipment

Content Insurance Covers:

  • Personal belongings such as clothing, furniture, and electronic equipment
  • Curtains
  • Washer and dryer
  • Portable and window air conditioners
  • Microwave oven
  • Carpets not included in building coverage (e.g., carpet installed over wood floors)
  • Valuable items such as original artwork and furs (up to $2,500)

If your property is located in a higher-risk flood zone, your lender may require it. Flood insurance is also available if you are not in a high-risk flood zone, and property owners may be eligible to purchase the coverage at lower-cost preferred rates. Even if the property isn’t in a flood zone, it may be wise to carry the coverage.

1.       Direct water away from structures, expand stormwater cache systems and have sand bags at the ready.

2.       Store goods a minimum of 8 to 12 inches above historic flood heights.

3.       Have an evacuation plan in place.

4.       Do a structural and site survey to evaluate year-round weather-related stressors like the weight of snow and ice, storm surge, surface water flooding, mud slides, and dam breaks/levee failures.

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