Floods and your homeowners policy

In recent years, roughly 25% of all flood insurance claims came from areas not considered high risk. Worst of all, most home and business insurance policies don't cover flood losses. Your home has a 26% chance of being damaged by a flood during the course of a 30 year mortgage, compared to a 9% chance of fire.

April 1, 2009

Did you know most home and business insurance policies don't cover flood losses? If your community is a participant in the National Flood Insurance Program (NFIP), you're eligible for federally sponsored Flood Insurance coverage for your home or business.

A standard National Flood Insurance Policy applies to a home, condominium, mobile home, rental or business property located in a Special Flood Hazard Area. It also covers properties in low to moderate risk areas.

Just when you thought it couldn't happen to you…

Floods happen in all 50 states: on coasts, on mountains, along rivers, in the desert, in towns and cities of every size.
In recent years, roughly 25% of all flood insurance claims came from areas not considered high risk.
You can't rely on Federal Disaster Assistance alone. Many people don't qualify for grants, making the most common form of assistance a disaster home loan. These loans must be repaid: principal plus interest.
A car can easily be carried away by just two feet of floodwater.
Hurricanes, winter storms and snowmelt are common (but often overlooked) causes of flooding.
New land development can increase flood risk, especially if the construction changes natural runoff paths.
Flood claims data confirms that a foot of water can destroy 60 of a building's personal property contents. Flash flooding usually causes more damage to a building's contents than damage to the building itself.
It takes 30 days after purchase for a policy to take effect, so it's important to buy insurance before the floodwaters start to rise.
Your home has a 26% chance of being damaged by a flood during the course of a 30-year mortgage, compared to a 9% chance of fire.
Last year, one-third of all claims paid by the NFIP were for policies in low-risk communities.

Flood insurance may be more affordable than you think

Since premiums are regulated by the federal government, there's only so much an insurance company can charge for flood coverage. The Federal Emergency Management Agency (FEMA) provides flood zone information to establish Flood Insurance rates. Once a community's flood risk zones have been determined, and rates established by the Federal Government, all companies offering National Flood Insurance provide coverage at the same price.