Flood Insurance Primer: Is Coverage Right for You?
There are many questions about how to get flood insurance and what it covers. Here are some common questions.
Do I need flood insurance?
Nearly all businesses and homeowners should consider flood insurance, even if they do not fall within high-risk zones on flood maps. Why? Because 25 percent of flood damage occurs in areas that are considered low to moderate risk.
Do I qualify for flood insurance?
Flood insurance is available to homeowners, renters, condo owners/renters and commercial owners/renters. Most flood insurance comes from the National Flood Insurance Program (NFIP), overseen and underwritten by the Federal Emergency Management Agency (FEMA).
If a community doesn’t participate in the program, nobody in that area is eligible to purchase the government insurance.
There is no major alternative to the NFIP. Floods pose too great a risk for the private sector to offer affordable insurance.
What is the flood risk for my home or business?
FEMA designates certain areas as having different levels of flood risk. To get a rough idea of the risk at your property, you can enter your address in the “one-step flood risk profile” at www.floodsmart.gov. The federal government creates maps that designate areas of risk.
How much does flood insurance cost?
Costs can vary widely depending upon what flood zone you are in and how far above the base flood elevation you are.
Private lenders generally require borrowers to carry flood insurance to cover the cost of a mortgage. Federally backed mortgage brokers must require their borrowers to carry flood insurance if the property is in a high-risk area. Those who have suffered flood damage and are seeking an SBA disaster loan must obtain flood insurance.
Are the items inside my home covered?
All NFIP policy forms can provide coverage for buildings and contents. However, you might want to discuss insuring personal property with your agent, because contents coverage is optional.
Coverage is limited in basements regardless of zone or date of construction. It's also limited in areas below the lowest elevated floor, depending on the flood zone and date of construction.
Property and belongings outside your home are not covered. Examples include trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs and swimming pools.