Typical homeowner policies do not cover flood, so it is most likely that unless you’ve purchased a flood insurance policy, you do not have coverage for flood losses. Even though flood insurance is available through many insurance companies, it is actually the federal government that is providing the policy through the National Flood Insurance Program (NFIP).
According to the NFIP, a flood is defined as an overflow of inland or tidal waters, unusual and rapid accumulation or runoff of surface waters from any source, a mudflow, or a collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.
The NFIP flood insurance products are generally more complicated than those offered by most other property insurers. Unlike a private property insurer, the NFIP does not have to compete against other insurers. The policy terms and rates for the various flood insurance policies are determined by the government. As a result, comparison-shopping for flood insurance is not necessary, but a buyer should carefully discuss and review the conditions and requirements of the applicable flood insurance policy with their agent.
It takes a minimum of 30 days for a flood insurance policy to become effective, unless it is being purchased in connection with purchasing a home or refinancing a mortgage. It is prudent, therefore, to purchase a flood insurance policy well before you think you will need protection. In addition, depending on the type and location of the building being insured, certain forms may have to be completed by a qualified individual such as an engineer.
Available Flood Insurance Policies
The NFIP offers three flood insurance policy forms. For each of the policies, contents coverage is provided if purchased. Policy types vary based on how a building is occupied.
Dwelling Form – Provides building coverage for residential buildings of no more than four families or single-family homes and includes limited coverage for detached garages.
General Property Form – Provides building coverage for nonresidential buildings, residential buildings of more than four families, manufactured homes, and residential condominium buildings if the named insured is the condominium association.
Residential Condominium Building Association Policy – Provides building coverage for a residential condominium building, including all units within the building and improvements made within the individual units. Owners of individual units can purchase building and contents coverage through the Dwelling Form.
Availability of Flood Insurance
Flood insurance provided by the NFIP is available in over 20,000 participating communities through private insurance companies. Check with your insurance agent to find out if your community participates.
Reduce Your Exposure to Flood Losses
The most important loss mitigation factor in reducing flood risk is the elevation of the structure. This means making sure that your home is at or above the projected flood elevation, a level that is commonly referred to as the “hundred-year flood level.”
Here are other things that can be done to help reduce future flood losses:
1. Raise the location of the main electrical switchbox, electrical outlets, and the appliances above the lowest floor level protects against some flood losses. Placing a heater and furnace on blocks also reduces exposure to floods.
2. If your sewer system doesn’t have a backflow valve, hire a licensed plumber to install one. Also, ask the plumber to check the function of your floating floor drain plug, or to install one, if one doesn’t already exist.
3. Fuel tanks, such as propane tanks, may float away, tip over, or otherwise cause damage due to flood waters. Secure them in accordance with local building codes.
Even if you are not located in a high risk flood zone, it is recommended to purchase a flood policy. For those that qualify for the preferred risk rates, the cost is minimal.