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.

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Flooding can affect every zip code

While your area might not be in a high-risk zone, it is not immune to flooding either. In fact, almost 30% of actual flood claims come from low to moderate risk areas. New land development can increase flood risk, especially if the construction changes natural runoff paths. And weather patterns are changing, making neighborhoods that have never before experienced a flood more vulnerable.

Don’t expect the government to help

Governmental assistance is only available in less than half of all floods, and it usually comes in the form of a loan-repayable with interest. In contrast, flood insurance pays qualified claims quickly, giving you the cash you need to get your business back to business.

There is a thirty day waiting period before coverage takes effect. Don’t wait until it is too late.

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The Biggert-Waters Act of 2012 has changed The National Flood Insurance Program (NFIP) to fill a $20 billion deficit created by large-scale disasters, such as hurricanes Katrina and Sandy, and to ensure that flood insurance rates more accurately reflect the real risk of flooding. The act eliminates premium subsidies. The greatest impact will be felt by older secondary homes in high risk flood areas.

In general, rate changes will have the greatest effect of properties built before 1975, or prior to the initial flood insurance rate map (FIRM) for the community that are in a high risk flood zone. These homes are referred to as being “Pre-FIRM”. Their rates have been subsidized over the years.

The NFIP flood insurance program has announced a rate increase of generally 10% (varies depending on the flood zone) that affects everyone. Everyone will also see a new charge of 5% to cover the Reserve Fund assessment. Preferred Risk policies in zones X, B or C are exempt from these two increases

The effect of the changes on the other NFIP policyholders will depend on their circumstances:

• 81% of the policyholders are paying the correct actuarially-determined rate.
• 5% of policyholders are paying a subsidized pre-FIRM rate. These are pre-FIRM non-primary residences, business properties and Severe Repetitive Loss policies. Their rates will be increasing by 25% per year until the true premium is reached.
• Not all subsidized policies will see large increases. Obtaining an Elevation Certificate is the best way to determine the true premium. Some premiums will decline, some will stay about the same, some will see a moderate increase and some a large increase. Without an Elevation Certificate, one cannot evaluate the true risk. Note: if you have a Preferred Flood Policy now, this does not apply.
• 10% of the policies are for primary residences. These policies for pre-FIRM homes will continue to be subsidized until the home is sold or the policy lapses.
• 4% of the policyholders are in pre-firm condos and multi-family buildings that are primary residences. Their subsidies will continue until FEMA develops guidance for removing the subsidies.

If you need to have an Elevation Certificate, it must be completed and signed by a licensed surveyor. It will certify the elevation of the lowest floor of your home or business. This is especially important if your structure is in a high-risk flood area. A photo of the structure must accompany the Elevation Certificate.

The rate increase will go into effect on October 1, 2013, except for Non-Primary residence polices that went into effect January 1, 2013. This includes units in condominiums and multi-family dwellings.

As you can see, the rules are not straightforward and can vary due to the type building, age of the building, flood zone and more. The general elevation of an area is important, as is the elevation of your building’s slab compared to the elevation of the middle of the road.

It is said that about 20% of all flood losses do not take place in a flood zone. The devastating Colorado floods occurred in an area that was considered low-hazard. We have many areas like that in Palm Beach County. Some are along A1A and some are further inland. In some cases, Preferred Risk policies can be written on homes in these areas at a greatly reduced premium.

For information or advice on this important coverage, please call us at 561-276-6055 or 800-272-6055 or email Insurance@gbifl.com.

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