Flood Insurance

When it comes to flood insurance, we’ve heard all of the reasons not to purchase coverage: “It’s too expensive”, or “I don’t live in a flood zone, I don’t need it”, Or even “My homeowner’s policy already covers that, right?”

The Truth Is:

Most homeowner’s policies don’t cover flood damage, but separate flood insurance can actually be quite affordable with policies for lower risk properties starting around $400-$500 per year. Floods can happen anywhere, and even properties located in “low-risk” flood zones can still be at risk.

If you’re even contemplating adding flood coverage to your program, it’s better to have something than nothing. After all, I’ve never heard someone complain about getting too much money when they do have a claim…

Below is a brief overview of the standard NFIP policy including the Insurance definition of a flood, what is and isn’t covered, and standard NFIP policy limits.

National Flood Insurance Program (NFIP)

What is it?

The NFIP is a federal program created by congress. The goal of the program is to provide affordable flood insurance and to mitigate future flood losses nationwide through community-enforced building and zoning ordinances.

Insurance Definition of a Flood

Flood: A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from overflow of inland or tidal waters, from unusual and rapid accumulation or runoff of surface waters from any source, or from mudflow.

In Simple Terms: Flood is an excess of water on land that is normally dry.

What does standard NFIP flood insurance Cover?

Dwelling Limit: $250,000
- Includes the Physical structure of the home and built-ins
Contents Limit: $100,000
- Your personal belongings – everything from your clothes in the closet to your dishes, towels, and soap in the kitchen

That is all!

Other structures: Casita, pool house, detached garage, shed, fencing, etc.
- NOT COVERED
Substitute housing after a flood claim if your home is uninhabitable
- NOT COVERED
NFIP claims are also settled on an Actual Cash value basis
- Meaning any damaged property/items include a deduction for depreciation when considering their replacement cost at the time of loss.
‘of two or more acres…or of two or more properties’
- This is a key component of the Insurance definition of flood, triggering coverage only if either of the above conditions are satisfied.

Other Things to Note:

Standard 30-Day Waiting Period

Unless your lender requires flood insurance in connection with the making, increasing, extending, or renewing of your loan, there is a standard 30-day waiting period that applies. It’s important not to wait for a rainy day if you’re considering adding flood insurance.

Excess Flood

Though not widely know, there are insurance companies that offer policies that will 1.) Fill in the coverage gaps of NFIP policies and 2.) Offer higher coverage limits.

Many of our High-Net Worth carriers we work with offer varying solutions to fit your needs. Whether you want flood coverage for the full value of your home and contents, or just something to supplement your NFIP coverage, we can work together to put the right solution in place.

Bottom Line

Contact the Experts

Beyond just purchasing a policy because your mortgage requires you to, water damage can be quite expensive, and flood is a confusing topic that even veteran agents struggle with. Don’t make it any harder on yourself than it needs to be.

Reach out to my team and me today. We breakdown the options to make it as simple as possible for you to learn what’s available and how it works so you can make your policies your own.