Flood Insurance FAQs
Roughly 40% of US residents live in shoreline communities, the overwhelming majority of which have some form of homeowner’s insurance. Unfortunately, homeowner’s insurance (also known as Hazard insurance) does not cover damage from flooding. So in 1968, Congress created the National Flood Insurance Program so that an affordable insurance option would exist for homeowners to seek coverage. Unfortunately, only about 12% of US residents actually carry Flood Insurance.
What is a flood?
Most flooding occurs as a temporary condition stemming from tidal surges, mudflows, and the sudden inundation of normally dry land from rainfall that then saturates the ground and creates surface water pooling. Generally at least two acres or two properties are impacted.
Is flood insurance expensive?
The cost of flood insurance will vary depending on the following factors:
- Which flood zone is your home located?
- Was your home built to the NFIP flood building code in effect at the time the house was originally built or substantially improved?
- What is your requested or required coverage limits?
Flood insurance purchased through the national flood insurance can range from $400 for preferred risk (X zone) policies to $50,000 per year for homes built incorrectly located in V flood zones. The A zone flood insurance policy for a home that has not been built to flood code containing $250,000 of dwelling coverage and $100,000 of contents coverage with a $1,250 deductible is roughly $4300 per year. If this same home was elevated and built to flood code, that cost would reduce to roughly $700 per year.
What is a flood zone?
A flood zone is a mapped area within a town that has entered into the National Flood Insurance Program and agreed to require a specific set of building codes thereafter. There are 3 typical flood zones you may encounter: A,V, & X:
- The A flood zone is the most common of special flood hazard areas. Homes in this zone are expected to have a 1% chance annually to endure a flood.
- Homes located in a V zone have a 1% chance of flooding annually, but also are at risk for more severe wave action. V zones are the most hazardous of flood zones and thus the cost of flood insurance is significantly higher.
- The X flood zone is a designation within towns that have entered he NFIP that fall below the 1% annual chance of flooding mark. Flood insurance is never mandatory in the X zone. Flood insurance premiums for these properties is significantly lower than A zone or V zone policies.
If my home is located in an X flood zone, should I purchase flood coverage?
Every year homes located in X flood zones are flooded. It’s important to remember that flood zones are statistically created and not a magic barrier against flood waters. It would be advisable that anyone with a property within a short distance of the coast or an A or V flood zone consider purchasing the coverage.
Additionally, anyone that owns a property with a high water table and regularly sees water pooling on the lawn when it rains heavily should purchase coverage. Remember, the sudden inundation of normally dry land is covered under a flood policy as long as 2 or more properties or acres are impacted. (Note: A road is considered a property.)
What is a flood insurance rate map?
A flood insurance rate map (FIRM) is a map created by FEMA of communities that have entered into the National Flood Insurance Program (NFIP) that illustrates where floodplains exist and which special flood risk zones are present. This is the official map used by towns, banks, and insurance agents to determine the cost of your flood insurance.
What is a flood elevation certificate?
A flood elevation certificate is the official survey documentation for homes located in flood zones used to determine the elevation of a home or building. This document, generally created by a hired licensed surveyor, provides all of the information required to determine the actual risk premium rate for that property. The cost to purchase a flood elevation certificate is between $400 and $1200 normally.
Do flood policies cover a burst pipe?
No, flood policies would not cover a burst pipe, however most homeowner’s insurance policies would cover the subsequent water damage.
Do I have to purchase flood insurance from the NFIP?
If you have a federally backed mortgage and your home is in the A or V flood zones, you will be required to purchase mandatory flood insurance. However, there are private market flood programs that exist as an alternative that in many cases is less expensive. It is strongly advised that you discuss the risks associated with purchasing private market flood coverage versus a NFIP flood policy with your insurance agent.
How much flood insurance coverage can I buy?
The typical NFIP flood policy provides up to $250,000 of dwelling coverage and $100,000 of contents coverage. However, you can purchase an excess flood insurance policy as well if you’d like to increase your policy limits. Generally, the maximum NFIP limits are not enough to cover the replacement cost of many homes, so its strongly advised that shoreline properties consider purchasing an excess flood insurance policy.
What is covered by a flood insurance policy?
A flood policy typically would cover your home, foundation, plumbing & electrical systems, Electrical and plumbing systems, HVAC equipment, furnaces, water heaters, Kitchen appliances, permanently installed carpeting over an unfinished floor, wallboard, paneling, bookcases, cabinets, window blinds, and debris removal. Clothing, furniture, electronic equipment, curtains, window AC units, portable microwaves, dishwashers, carpets not covered by your building policy, washers & dryers, freezer, frozen food and Up to $2,500 in valuables. Also, 10% of your dwelling limit is available for detached structures like a garage. However in a claim situation, if you exhaust the policy limit on the main building, there would be no coverage for any detached structures.
For more information or a quote for Flood, Excess Flood
or Private Market Flood Insurance,
please contact our office at 203-655-6974.