Flood damage coverage is excluded from your homeowners' insurance policy. However, you can purchase flood insurance if your community participates in the Federal Flood Insurance Program. The federally subsidized flood insurance policies and premium costs are based on a flood risk assessment and the types of optional coverage you purchase.
Looking outside your window after a heavy downpour, you become alarmed at seeing the overflow of a nearby ravine encroaching on your lawn. And, those dark clouds above are threatening to unleash another downpour. You remember that your homeowners' policy does not cover flood damage. Don't worry!
Federal Flood Insurance Program
You can buy federally subsidized flood insurance from the National Flood Insurance Program (NFIP), created in 1968 to protect communities from potential flood damage through floodplain management and to provide flood insurance to property owners. The NFIP is managed by the Federal Emergency Management Administration (FEMA).
For your home to qualify for flood insurance, your community must join the NFIP and must agree to adopt and enforce certain federal floodplain management standards. Floodplain management is a community program that adopts local measures to reduce future flood damage.
FEMA will work closely with your community to assess and assign flood risk levels: high risk, moderate risk or low risk. When land is designated as a high risk area, it is divided into flood zones and the community must take measures to prevent new home development from increasing the threat of flooding and to protect existing buildings from anticipated flood damage. Such measures might include building levees. In return, homeowners in the community can buy flood insurance.
Flood Insurance Policies
NFIP offers several different flood insurance policies based on the risk level where the property is located and the type of building on the property.
Homeowners in a high risk area should purchase the Standard Flood Insurance Policy (SFIP). For homes in low or moderate risk areas, the homeowner may purchase the lower-cost Preferred Risk Insurance Policy.
While both policies offer different types of coverage, they share some common features:
- Coverage under either policy will not begin until 30 days after the purchase date
- They will pay the replacement cost or actual cash value of your loss up to a limit of liability
- You are required to choose the amount of your deductible
- Coverage for flood damage to basements is limited.
Standard Flood Insurance Policy
Generally, the standard policy covers physical damage to your home or your personal property that is directly caused by a flood. Coverage for your home includes:
- The building, its foundation, electrical, plumbing, heating and air conditioning systems
- Certain major appliances
- Permanently installed carpeting, paneling, wallboard, bookcases and cabinets
- Detached garages up to 10% of building property coverage limits
- Personal belongings including clothing, furniture and electronic equipment
- Certain portable appliances
- Certain valuable items up to a limit of liability
- Debris removal
The standard policy does not cover the following items:
- Damage caused by moisture, mildew or mold
- Loss of currency, precious metals or valuable papers
- Trees, plants, wells, septic systems, walks, decks, patios, fences, hot tubs and swimming pools
- Temporary living expenses
- Financial losses
The purchase of the preferred risk policy offers the homeowner more coverage options.
Write Your Own Program
As an alternative to buying a policy from FEMA, the Write Your Own (WYO) program allows participating insurers to write and service the SFIP in their own name. FEMA underwrites the policies and the insurers receive an expense allowance for the policies they write. Policies written under the WYO program must still comply with NFIP requirements.
Questions for Your Attorney
- What if I have flood damage due to a hurricane that is part of a declared disaster? Does my policy still apply? Do I receive additional benefits?
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- Insuring Your Home
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Related Web Links
- Federal Emergency Management Administration
- The National Flood Insurance Program
- The Write Your Own (WYO) Program