Flood Insurance: Understanding Your Coverage and Risk
Picture this: You wake up in a deep sweat in the middle of the night. You know the feeling… panic runs through your body, as one nagging question haunts you: Is our home covered if flooding hits our area? Surely it must be…right?
Wrong. While the thought of losing your condo or home is horrifying, often, people are mistaken that their standard homeowner’s insurance policy covers flooding. IT DOES NOT! Standard coverage for homeowners, renters or even commercial policies does NOT cover flooding.
While there are obvious causes of flooding… overflowing rivers, streams, and lakes, and runoff of a heavy snow or ice season, other things are termed ‘flooding’… such as broken sewer mains that flood two homes or more. All of these would be covered under a flood policy.
If you are looking for flood coverage, it must be purchased through a separate policy. This can either be purchased through the National Flood Insurance Program (NFIP) which tops off at $250,000 per unit for associations or from a private insurance carrier. Without a flood policy, you must understand that there will be no coverage in the event that the building(s) are damaged due to flooding. Period.
Confusion about flood coverage is common. Here are some basics to help keep you informed…
Misconception 1: My homeowner’s policy covers flooding. False. You must purchase a supplement policy.
Misconception 2: My detached garage would be covered as well. False. A separate flood policy would be needed
Misconception 3: Personal belongings, such as in a basement, are covered with flood insurance. False. It does not cover personal items.
Misconception 4: Flood insurance covers all losses. False. Many policies top off at $250,000 for home damage.
Misconception 5: You must live in a high-risk area to have flood coverage. False. Dangers of flooding happen in all areas.
Misconception 6: Flood policies cover all storm related damage. False. Not all water damage is equal. Understand the difference between water damage and flood damage.
Misconception 7: Flood plain maps never change. False. Just like our natural terrain is in constant change, so are flood plains. Stay informed where your home lies on the current map.
If your Association is in a high hazard flood zone, all unit owners will be required to purchase flood insurance for at least the replacement cost value or $250,000 per unit, whichever is less. From a claims point of view, this is also beneficial to have one policy in force. It insures that the Association is dealing with one insurance company for the entire loss versus multiple insurance companies, or at the risk of being underinsured.
At ABI Insurance, we recommend that an Association consider flood coverage even if they are not in a high hazard flood zone as the property can still be exposed to flooding. According to the NFIP, 30% of their claims are with properties not in high hazard zones. Associations near water or even near sloped areas should strongly consider flood insurance or any property for that matter.
Have questions? Give Vern or Sara at ABI Insurance a call today. They can walk you through the strategies of insuring your home.