As we see time and time again, no home is completely safe from the risk of flooding. Flood insurance can be the difference between recovering or being financially devastated. Just one inch of water in a home can cost more than $25,000 in damage—why risk it?
Do You Need Flood Insurance?
- FACT: Homeowners and renters insurance does not typically cover flood damage.
- FACT: More than 20% of flood claims come from properties outside high-risk flood zones.
- FACT: Flood insurance can pay regardless of whether or not there is a Presidential Disaster Declaration.
- FACT: Most federal disaster assistance comes in the form of low-interest disaster loans from the U.S. Small Business Administration (SBA) and you have to pay them back. FEMA offers disaster grants that don’t need to be paid back, but this amount is often much less than what is needed to recover. A claim against your flood insurance policy could, and often does, provide more funds for recovery than those you could qualify for from FEMA or the SBA — and you don’t have to pay it back.
It’s easy to see that having flood insurance provides important recovery help. The most common flood insurance is offered through the federally regulated program known as the National Flood Insurance Program (NFIP) with options for your home only or home and contents.
- The maximum available coverage limit for the dwelling is $250,000.
- The maximum available coverage limit for contents in your home is $100,000
What if you need more than $250,000 worth of coverage for your home or more than $100,000 of coverage for your contents? Excess Flood insurance is available through private companies.
Federal Flood Insurance – What is Covered vs. What is Not
What Qualifies as a Flood?
Water has to cover at least 2 acres of land that’s normally dry, or has to have damaged two or more properties (one being your home). Also, the water has to come from:
- Overflowing inland or tidal waters
- Unusual, rapid accumulation or runoff of surface waters from any source
- Mudflow (that’s mud carried by a flow of water, creating a river of mud)
- You’re also covered when shorefront land collapses or sinks due to waters above “anticipated cyclical levels.”
*Water and seepage that comes from sewer or drain backups, or a sump pump that overflows is not considered a flood. Wind driven rain is not covered.
Please do not wait for an impending storm to purchase federal flood insurance. There’s usually a 30-day waiting period. Some private policies offer a 15-day waiting period.
When advising buyers who are new to Florida or inexperienced with hurricanes, here are 10 important reminders:
- For homes with a replacement value over $1 million – their insurance agent should be reviewing package insurance policy options that give them an opportunity to purchase their insurance from one of the premier insurance carriers such as Chubb, AIG, or Pure. These carriers do the best job with paying claims and covering the loss assessment claims from their associations and golf clubs.
- Insure the home to its full replacement value; this is different than market value. Full replacement value is what it would cost today to rebuild the home as new.
- Be sure that the homeowner policy covers wind driven rain.
- Be sure that coverage for the screen enclosure is added by endorsement if it is excluded under dwelling for losses as a result of hurricane.
- Purchase full limits for mold coverage – the maximum is $50,000.
- Purchase flood insurance for the main house and the detached guest house, even when the home is in a non-flood hazard area.
- Review options for a second layer flood policy which will allow you to insure the home to value against the peril of flood.
- Have a reliable home check representative in place to be sure that the home is checked regularly and that necessary measures are taken at the time of a loss to prevent further damage that could have been avoided.
- Consider installing high impact windows/shutters if they are not already in place. Also, having a permanently installed generator is of upmost importance.
- Recommend they consult with a qualified insurance professional with a comprehensive understanding of the Florida insurance marketplace, and one who has access to the premier carriers, such as Chubb, AIG and Pure along with other reliable insurance carriers that hold A ratings by AM Best. Also, agent selection should include the agency’s roll in the claims process. In other words, does the agency have a claims advocate working on the homeowner’s behalf?
In 2016, five flood-related events exceeded $1 billion in losses each with total flood losses reaching $17 billion or six times greater than overall flood damage in 2015. After borrowing another $1.6 billion from the U.S. Treasury Department to supplement the losses sustained last year, the NFIP now faces expiration in September. The program was last reauthorized in 2012 after a series of lapses and extensions that left policyholders on the fence.
Given the increase in flood losses seen, many feel the NFIP is not sustainable in its current state. There is a push to move more of the flood risk back into the private insurance market, and private sector insurance companies are now coming around to the idea that offering private flood insurance policies would be a strong sector for their balance sheets. Recently, several carriers have launched private flood insurance alternatives to the RCBAP tailored to meet the needs of condo associations located in high-risk flood areas. Read more
Following the recent devastation and flooding in Louisiana over the past few weeks, many are now facing the arduous task of removing debris from their properties and submitting insurance claims. Believe it or not, “debris” accounts for roughly 27% of the total cost of a disaster. Yet, debris management remains one of the most overlooked and least-planned-for components of disaster response and recovery.
FEMA recently issued a bulletin that outlines a policyholder’s responsibilities in the event of a loss. The Fact Sheet provided by FEMA details how you should report a flood claim; what to document in the aftermath of a disaster; how to properly document and dispose of debris/damaged property; where to get help; and more.
Please keep in mind, there are specific responsibilities that need to be followed in the event of a loss to ensure proper payment of claims.
Click here to view the full memorandum from FEMA. Our in-house staff of experienced flood insurance professionals is available to handle your questions and provide guidance.
The Federal Emergency Management Agency (FEMA) made important changes to the National Flood Insurance Program (NFIP). These changes are the result of continued implementation of the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) and the Biggert-Waters Flood Insurance Reform Act of 2012 (BW12). Highlights of the changes include the following and apply to new insurance policies and renewals effective on or after April 1, 2016:
Beginning April 1, 2016, the total average premium increase for all NFIP policies will be 9%. The actual increase for an individual policy may be higher, based on the specific underwriting criteria.
The largest increases will be felt by Pre-FIRM homeowners (homes built prior to 1974 in the City of Naples and 1979 in Collier County), as well as those properties newly mapped from Zone X to an A Zone.
Buyers looking to obtain coverage on a home that once was in Zone X will no longer be eligible for the Preferred Policy Extension. These homes will be rated using an elevation certificate. This change may amount to a premium increase of hundreds of dollars per year. Affected property owners may want to explore obtaining a Letter of Map Amendment (LOMA). If the home qualifies, NFIP will place the property back in Zone X.
Owners of older homes (Pre-FIRM) will lose the subsidized rates if they allow their policy to lapse more than 90 days. Remember those five-figure premiums we were seeing after BW12?
Have a question about Flood Insurance? Let Gulfshore Insurance be your resource.