Flood Insurance

A homeowner’s policy does not usually cover flood damage of any kind. Flood Insurance covers losses to your property caused by flooding. From structural and mechanical damage to flood debris cleanup, your investment is protected by a flood insurance policy.

The National Flood Insurance Program NFIP makes Federally-backed flood insurance available in communities that agree to adopt and enforce floodplain management ordinances to reduce future flood damage. National Flood Insurance is available in more than 19,000 communities across the United States and its territories.

You are eligible to purchase flood insurance as long as your community participates in the National Flood Insurance Program. Check the Community Status Book to see if your community is already an NFIP partner. The Community Status Book can be found on the FEMA Internet website.

Flood insurance premiums can be cheaper than Federal Disaster Assistance programs, which are usually loans that must be paid back with interest.

You need to know this.

  Federal disaster assistance is only available if the President declares a disaster. More than 90 percent of all disasters in the United States are not Presidentially declared. Flood insurance pays even if a disaster is not declared.

Even in a declared state of emergency, Federal Disaster Assistance is usually a loan that must be paid back with interest. For example : a thirty year $50,000 loan at 4% interest, would have a monthly payment of about $240 a month – $2,880 a year. Compare that to a $100,000 flood insurance premium, which is about $33 a month – $500 a year.

In addition, you can purchase separate coverage that insures most of your personal property and belongings up to a specified limit, including:

•         Clothing
•         Furniture, housewares, bedding
•         Decorative items, lamps and lighting fixtures
•         Books, home electronics, computers
•         Area rugs and draperies
•         Clothes washers and dryers
•         Air conditioners
•         Food freezers and the food in them
•         Portable microwave ovens

Having flood insurance gives you many benefits. Not only is coverage there when you need it, but it also:

•         Compensates for all covered losses
•         Compensates for flood damages even if federal disaster aid is unavailable
•         Pays for your covered losses, unlike interest-bearing loans through federal disaster assistance
•         Comes in low-cost policies for those who qualify
•         Guarantees compensation for flood damages because the Federal government backs NFIP flood insurance
•         Helps you move on – if your property is damaged by flood, your agent is there to help you handle your claim (note: most claims are paid within 30 to 60 days)

Flood Insurance Basics

The acquisition of flood insurance and related expenses and costs are based entirely on the characteristics of an individual parcel of land including any structures. Some primary factors are :

•         Property Location relative to flood hazard areas and zones of risk.
•         Property Location relative to emergency response accessibility.
•         Participation in a Community Rating System (CRS)
•         Location within a Non-Special Flood Hazard Areas (NSFHA).

Non-Special Flood Hazard Areas are low to moderate risk flood zones. On the FIRM, they are unshaded or lightly shaded. Historically, 30% of all claims occur in these areas. A Preferred Risk Policy may be available.

•         Location within Special Flood Hazard Areas (SFHA). SFHA’s are the flood zones that have the greatest risk of flooding. They are darkly shaded areas on FIRM maps. During a 30-year mortgage, there is a 26% chance of flooding in these areas and only a 4% chance of fire in the same period.

SFHA designations start with the letters \”A\” (Riverine/Inland Group) or \”V\” (Coastal Group) – indicated by tidal floods with water current velocity.

•         Community Status – NFIP partner – Regular or Emergency Program. The community status book can be found on FEMA Internet website.
•         The Age of the Structure.
•         Pre-FIRM or Post-FIRM

o Pre-FIRM buildings are those built before the effective date of the first Flood Insurance Rate Map (FIRM) for a community. This means they were built before detailed flood hazard data and flood elevations were provided to the community, and usually before the community enacted comprehensive rules on floodplain regulation. Pre-FIRM buildings can be insured using \”subsidized\” rates. These rates are designed to help people afford flood insurance even though their buildings were not built with flood protection in mind.

o Post-FIRM buildings are new construction and those built after the effective date of the first Flood Insurance Rate Map (FIRM) for a community. Insurance rates for Post-FIRM buildings are dependent on the elevation of the lowest floor in relation to the Base Flood Elevation (BFE).

•         Elevation Certificate requirement or availability.
•         Building Occupancy.
•         Existence of basement enclosures, and sub-levels.
•         Number of floors in the building, including basement enclosures, and sub-levels.
•         Replacement cost of the building.
•         Insurance value requested.
•         Deductible amount requested.

You Need to Know This about Flood Insurance .

Lower costs for insurance premiums may be available if your property is in an area with a low to moderate risk. If your property is eligible for the Preferred Risk Policy, your flood insurance premium, including coverage for your property\’s contents, could be significantly lower. Eligibility for a preferred risk policy is based on the rating of the entire community that contains your property. Raiding eligibility can be found in the NFIP Community Rating System.

The National Flood Insurance Program\’s (NFIP) Community Rating System (CRS) is a voluntary incentive program that recognizes and encourages community floodplain management activities that exceed the minimum NFIP requirements.

As a result, flood insurance premium rates are discounted to reflect the reduced flood risk resulting from the community actions meeting the three goals of the CRS:

1. Reduce flood losses.
2. Facilitate accurate insurance rating.
3. Promote the awareness of flood insurance.

For CRS participating communities, flood insurance premium rates are discounted in increments of 5%; i.e., a Class 1 community would receive a 45% premium discount, while a Class 9 community would receive a 5% discount (a Class 10 is not participating in the CRS and receives no discount).

Based on your community\’s CRS ratings, you can qualify for up to a 45% discount of your annual flood insurance premium.

Here\’s how :

The National Flood Insurance Program (NFIP) requires communities to maintain a minimum level of floodplain management ordinances for its residents to be eligible to purchase flood insurance.

To encourage communities to exceed these minimum requirements, the NFIP established the Community Rating System (CRS). In exchange for increasing flood preparedness and achieving a CRS rating, the community\’s residents are offered discounted flood insurance premium rates.

Communities are rated by Class, of which there are 10.

Class 1 requires the most credit points and awards the highest premium reduction. Class 10 receives no premium reduction and is any community in full compliance with the rules and regulations of the NFIP, but has not received a lower CRS rating.

The CRS identifies 18 creditable activities, organized under four categories. Each activity is assigned evaluation measures and a corresponding score. A community is rated on the total number of points generated during a particular evaluation.

Eligible floodplain management activities include:

• Public Information Activities—from elevation certificates, flood zone information and outreach projects for the disclosure of hazards, flood protection information and flood protection assistance.
• Mapping & Regulator Activities—from detailed flood data and open space preservation to flood data maintenance and stormwater management.
• Flood Damage Reduction Activities—from floodplain management and acquisition/relocation plans to flood protection and drainage systems maintenance.
• Flood Preparedness Activities—from flood warning programs to levee safety to dam safety.

Today, more than 1,000 communities participate in CRS and receive discounts on the cost of their flood insurance premiums. Yours may be one. You can find out by visiting the FEMA Internet website.

The main byword for flood protection is preparedness. It\’s important to take all possible measures to deal with the onslaught as well as the aftermath of a flood.

It takes 30 days after purchase for a policy to take effect. So, to be prepared it\’s important to buy insurance before the floodwaters start to rise.

Be prepared. Buy flood insurance.

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