If a storm surge causes coastal flooding resulting in severe damage to your home and its contents, your homeowners insurance will NOT provide coverage. Damages caused by floods are specifically excluded from all homeowner policies. You need to have a separate flood insurance policy in order to be covered.
Flood insurance is a necessity for those who live in flood prone areas. However, it is important to understand that while homeowners insurance is designed to bring your home and its contents back to the same condition it was in before a loss, flood insurance is only meant to get you back on your feet.
In the not too distant past, flood insurance was unavailable because it was too costly for private insurers to offer. But in 1968, Congress established the National Flood Insurance Program (NFIP) to give property owners the opportunity to purchase insurance protection for flood losses. To be eligible, your community must participate in the national Special Flood Hazard Areas (SFHAs) program. Leonard Insurance or your community officials can inform you whether or not your community is participating in the NFIP.
What is a flood?
“Flood” is defined as a general and temporary condition of partial or complete inundation of normally dry land areas from:
- overflow of inland or tidal waters
- the unusual and rapid accumulation or runoff of surface waters from any source
- mudslides caused by flooding.
Do I need flood insurance?
Don’t let the fact that you don’t own beach-front property lull you into a sense of false security. The fact is that beach-front structures only account for 3% of all flood losses. Homeowners who live in high hazard flood areas should seriously contemplate purchasing flood insurance – especially when you consider you have a 26% chance of having a flood loss over the course of a 30 year mortgage! Often, flood insurance is required as a condition of granting a mortgage if your lender determines that your home is in a high hazard flood area. Even if you live in a low hazard flood area your property may still be at risk. Each year, about 35% of all flood claims paid are for property located outside high-risk areas. The good news is that there is a Preferred Risk program that offers substantial premium discounts for homes located in low hazard areas.
Don’t wait until the water’s rising to decide that you need Flood Insurance! There is a standard 30-day waiting period for new applications and for endorsements to increase coverage.
Flood insurance is catastrophic insurance, which means there are limits on how much insurance will be provided. For example, residential buildings can only receive up to $250,000 in coverage and non-residential buildings only $500,000. Contents within the home are also limited up to $100,000 for residential and up to $500,000 for non-residential locations.
Direct physical losses by flood are covered. Also covered are losses resulting from flood-related erosion caused by excessive waters accompanied by a severe storm, flash flood, abnormal tidal surge or the like, which result in flooding. Damages due to mudslides, if caused by flooding, are also covered.
Remember, flood insurance is not meant to restore your home to its original condition, just to get you back on your feet! And, it’s much better than having no cover at all.
A deductible is the amount you have to pay out of your own pocket before the insurance coverage takes over. Standard flood deductibles are $1,000 to $2,000. Higher deductibles are available to reduce policy premiums. Please be aware that with flood insurance your deductible will be applied to both your building and its contents, even though they might be damaged by the same flood.
This is not intended to be a complete description of coverage. Leonard Insurance can provide you with the coverage which suits you.