Flood insurance provides protection to repair or replace your home and its contents following a flood. While the National Flood Insurance Program limits dwelling coverage at $250,000, private insurers such as Neptune offer higher amounts.
As with car and homeowners insurance policies, choosing a higher deductible can lower your premium but could require you to pay out-of-pocket more should an accident occur.
Coverage
Homeowners insurance doesn’t cover flood damage, so anyone living in a flood zone should get additional flood coverage either through the National Flood Insurance Program or another private provider. An agent can assist with finding appropriate policies.
The National Flood Insurance Program (NFIP) policies can cover up to $250,000 of your house and $100,000 of belongings, and come equipped with a free online tool from the government for you to assess whether your area is at risk. Furthermore, additional coverage such as Wright or SWBC policies provide extra flood coverage after their main policy kicks in – giving you peace of mind during a flood disaster.
If your community faces at least 1% chance of flooding annually, an affordable NFIP policy could be in your best interests. By agreeing to comply with floodplain management guidelines and contribute towards rebuilding costs for NFIP as an individual policy holder, debris removal costs and temporary storage fees would all be covered as part of that coverage.
Your National Flood Insurance Policy reimburses lost belongings on an actual cash value basis, taking depreciation into account. That means if a 15-year-old recliner gets wet in a flood, its replacement could only cover enough to purchase one used of similar quality – potentially leaving a gaping hole that is costly if your home contains more expensive furniture or electronics.
Private flood policies tend to offer higher limits and more comprehensive protection for both property and belongings, such as Neptune or Chubb’s Coastal Flood Insurance Policy which reimburses on an “replacement cost basis,” meaning damaged items will be replaced with brand new ones.
Condo owners can purchase an NFIP-approved RCBAP policy designed specifically to cover them; this provides coverage of both their building and personal belongings kept inside, such as clothing, furniture and electronics. Please be aware that NFIP does not insure items like cars; you should secure these with standard auto policies instead. Also if water damage from sources other than flooding occurs – such as burst pipes – your policy won’t provide coverage.
Deductibles
Flood insurance provides property coverage against flooding damage. The National Flood Insurance Program (NFIP) offers several policy options for homeowners, condominium owners and renters to protect themselves from this potential peril. Coverage amounts, deductible levels and policy specifics all vary among policies offered through NFIP.
NFIP’s basic policy offers both dwelling and personal property coverage. Dwelling coverage (also referred to as building coverage) helps pay to repair or rebuild homes after they have been damaged by flooding; the amount covered under this category cannot exceed $250,000. Meanwhile, personal property coverage pays to replace or reimburse household members’ belongings lost or stolen as a result of flooding; personal property coverage limits set by NFIP range from $100,000 per homeowner/tenant respectively.
An NFIP policy not only covers the costs associated with replacing your belongings, but it can also cover temporary living expenses if flood damage forces you out of your home and forces you to vacate it due to flood damage. This coverage sets it apart from standard home insurance which generally doesn’t offer this feature.
When selecting a deductible, higher amounts will generally mean lower flood insurance premiums; however, it’s essential that you carefully weigh any advantages against potential costs associated with paying out-of-pocket for damage yourself.
People who have experienced prior flood damage may be more willing to accept a higher deductible than those without, while it’s also possible that the NFIP is using its $10,000 maximum deductible as an inducement to get more people insured against flooding.
If you reside in an area with low to moderate flood risks, speak to your insurance provider or agent about whether a subsidized Preferred Risk Policy would suit. While this policy won’t offer all the protection offered by an NFIP policy, it could save around $700 each year in premiums. In addition, taking steps such as installing flood gates or elevating equipment like hot water heaters may qualify you for a mitigation discount that further lowers premiums.
Excess
Most homeowners looking for flood insurance buy it through the National Flood Insurance Program, which offers policies at reduced rates. Unfortunately, these NFIP policies only cover up to $250,000 worth of structures and $100,000 of personal property – so if your clients’ homes exceed this value they’ll require an excess flood policy to ensure its protection.
As a broker, you can help your clients understand the need for additional flood coverage in an age of more frequent and extreme weather events, leading to flooding and property damage. Excess flood coverage is available from private insurers who offer policies which supplement rather than replace National Flood Insurance Program policies; usually providing higher maximum coverage limits with more options for customization than their NFIP counterparts.
Your client may qualify for an exemption if certain electrical and mechanical equipment that’s located above the first floor is located above their home, and/or qualify for an insurance discount by installing flood vents in enclosures or crawl spaces. Furthermore, private insurers typically have more lenient requirements for elevation certificates when it comes to getting new mortgage loans than does the National Flood Insurance Program (NFIP).
An additional advantage of an excess flood policy is its flexibility; it can be tailored specifically to a client and sold together with their existing homeowner’s or businessowner’s policy. Both NFIP and most private insurance companies require a hazard inspection prior to issuing flood policies; this hazard assessment can also serve to assess their client’s risk and ascertain if supplemental or excess coverage is required.
Experienced, knowledgeable underwriters are key when assessing client risks and helping them decide the amount of flood coverage needed. At Jencap, our personal lines broker team offers primary and excess flood policies as well as hard-to-place homeowners coverage solutions. Reach out to us now to discover how we can support your clients with comprehensive flood solutions!
Policy Limits
Flood insurance policies cover two categories of items, building coverage and contents coverage. How much you receive to replace or repair these items largely depends on your policy limits; which may differ considerably between insurers.
NFIP provides dwelling coverage up to $250,000, covering repairs or rebuilding after flooding; private insurers also provide higher limits of dwelling coverage.
Flood insurance policies typically offer up to $100,000 of personal property coverage, which pays to replace or repair items like furniture and clothes. You may be able to increase this limit through private companies that do not participate in the National Flood Insurance Program such as Neptune Flood Insurance and Chubb.
Flood insurance does not typically include extra living expense coverage, though you might be able to buy additional coverage through private insurers such as Flood Guard and Florida Peninsula Insurance Co.
Most National Flood Insurance Policy policies offer up to $250,000 of building property coverage, designed to safeguard against costs related to replacing items such as appliances and plumbing systems that might become damaged after flooding occurs. You may choose not to waive the dwelling coverage portion of an NFIP policy but cannot do so regarding contents coverage.
NFIP contents coverage is calculated based on actual cash value calculations, which means your payouts will reflect how much your belongings were worth when damaged or destroyed rather than their current market value. For example, if a 15-year-old recliner is destroyed in a flood, you will only receive enough from NFIP for you to buy an equivalent secondhand version from them.
Most flood policies come with a 30-day waiting period before filing a claim, though in certain instances this could be waived, for instance if you need the policy for closing on or refinancing of your home, or were recently added to a high-risk zone. Furthermore, in order to receive future federal disaster aid such as FEMA grants or SBA low-interest loans you must carry a flood policy as eligibility criteria for future assistance may change over time.