Homeowner’s policies do not cover flood damage!! Yet, during hurricane season, many hurricane claims are denied because the loss is actually caused by flooding. This leaves the homeowner frustrated, angry, and cynical about insurance in general. Homeowners in Florida need to purchase flood insurance, even if they are not in a flood hazard zone.
This is a brief tutorial on flood insurance and why you need it, even if you have homeowners insurance.
How Do I Buy Flood Insurance?
Gracey-Backer, Inc. is an agent for the National Flood Insurance Program (NFIP), which is a division of the Federal Emergency Management Agency (FEMA).
What Does Flood Insurance Cover?
Flood insurance provides up to $250,000 coverage for buildings and $100,000 for contents for flood damage to your property. If you desire higher levels of coverage, you may purchase an excess flood insurance policy from other sources. According to the NFIP, the average flood insurance policy costs $570 per year.
If your home is located in a high risk flood zone (A or V), where the risk of flood damage is excessive, your lender will require you to purchase flood insurance. If your home is located in a less risky flood zone (B, C or X), where there is less risk of flood damage, you should still consider purchasing flood insurance, as most flood damage occurs in low to moderate risk zones. You should qualify for a preferred risk flood policy, with the flood insurance premium as low as $129 per year for building and contents.
If I have an Insurance Claim for Flood Damage, What Can I Anticipate Receiving?
- Building – You can purchase replacement cost coverage if the home is your primary residence. You need to purchase an amount at least 80% of the full cost to replace your home with new materials and design, or the maximum amount available under the flood insurance program.
- Contents – If you have an insurance claim for flood damage, the most you will receive is actual cash value, the value of your contents less depreciation.
Are There Any Major Exclusions if I File an Insurance Claim for Flooding?
As with any insurance policy, the flood insurance policy is comprehensive, but does not cover everything. The following are key flood insurance policy exclusions:
Living Expenses or Business Interruption: The NFIP policy excludes additional living costs (such as renting a hotel room) you may incur as the result of flood damage. It does not cover lost income (if you operate a business out of your home) or any other loss of your home’s use.
Water Coming from Inside your Home: If a pipe breaks or a toilet overflows and water damages your property, there is no Flood coverage if an insurance claim is made. You should place a claim under your homeowner’s policy.
Swimming Pools and Landscaping: If your swimming pool overflows or leaks, causing an insurance claim, there is no Flood coverage. Additionally, there is an exclusion for flood damage to flowers, landscaping, vegetable gardens, etc.
Small Floods: To be deemed a flood for insurance claims sake, the water must have covered at least two acres or have affected at least one other property. If you sustain mold or mildew damage that could have been prevented, there is also no coverage.
Money and Valuable Papers: Your flood insurance policy will not pay if you file an insurance claim for damage to paper, currency, precious metals, stock certificates or any other valuable documents which sustain flood damage.
Contents Located Below-Ground: Personal property and improvements located in a basement or other areas of your home below the lowest elevated floor are not covered for flood damage.
There Is a Waiting Period for the Flood Policy to Take Effect
You cannot purchase a flood insurance policy if a hurricane is bearing down on your location. With all flood insurance policies, there is a 30 day waiting period once an application and payment are received.
Even if it is not hurricane season, you can still benefit by purchasing a flood insurance policy now. Flood damage can occur from heavy Florida rainstorms, storm surges, clogged storm drainage systems, levy failures and mudslides.
Barbara Gracey Backer
Barbara Gracey Backer is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance. She may be contacted at 800-272-6055 X118 or at firstname.lastname@example.org.