Flood insurance. Spring is here, bringing rain and often times flooding. This year we’ve had an abundance of rain in Texas. We see flooding occurring all across our nation from the coast to inland locations. It can occur anywhere when water rises very quickly and without much warning. It does not only occur near rivers, lakes or streams. And it doesn’t take a hurricane for your home to flood.
Those with property in high-risk flood zones must purchase flood insurance if their mortgages require them to carry this coverage. Flood maps are drawn to inform you about your risk. They also set building standards which help determine the risk and cost of flood insurance. FEMA regularly updates their flood maps giving communities assigned risk categories. Mortgage companies, for example, use flood insurance maps to decide if they will require flood insurance for a loan.
Flood maps need to be updated because over time, natural disasters, weather patterns and community development can change the flood risk in a particular location. A property may change from a no-risk zone to a higher risk zone because of these changes. Also, just the opposite can occur. Even the development of a new neighborhood subdivision close to your existing residence may change your risk zone if moving that dirt to build more houses causes a change in the drainage of excess water when it rains.
Your standard homeowners policy does not provide flood coverage. There are two types of flood insurance. One is available through FEMA and the other is available through private insurers. Both types have varying coverage options and costs:
The National Flood Insurance Program offers flood insurance through FEMA. If your community is in one of the 21,000+ communities included in the program, you should be eligible for building property and personal property/contents coverage. However, it takes thirty days for NFIP coverage to go into effect in most cases so you shouldn’t wait until the last minute to get coverage. NFIP insurance is sold through regular insurance agencies, but not all insurance agencies offer NFIP. Typically, NFIP is cheaper than private insurance, but not always. Depending on the type of claim and the capacity of your insurance company, full payout on a claim may take several months, so be prepared to wait. In some cases, you might have to make repairs prior to the company reimbursing you, or they may ask for a quote before providing payment. Assuming you have both policies in place, NFIP will cover up to $250,000 for damage to your home (Building Property Coverage) and up to $100,000 for your belongings (Personal Property Coverage). You will need to know what is and isn’t typically covered under your policy. Private flood insurance, which is not funded through the federal government, is only offered by a limited number of insurers. Because private flood policies vary, you’ll want to ask for quotes on both NFIP and private flood insurance to compare coverage. Private flood insurance typically offers a higher level of coverage than NFIP’s insurance. However, with private insurance you’re likely to pay a higher premium, especially if you live in a high-risk area. Instead of a 30-day wait, with some private insurers your coverage could go into effect in less than a week. If you have to relocate temporarily, private insurance may provide for short-term housing. Depending on the policy, you could also potentially purchase coverage for items not covered through NFIP. Also, a private insurer may determine that your property is in a lower risk area than FEMA’s flood maps currently
