Korene's Blog

Flooding is the most common natural disaster in the country. It's a phenomenon that people have come to associate with states along the Gulf Coast, since year after year we see images of beachfront homes battered by storms. As bad as those images are, some of the most damaging floods that follow hurricanes occur hundreds of miles inland. And well north of the Gulf Coast region, residents of Massachusetts,

Each year, the U.S. suffers $2 billion in property damages from flooding.      If you live in a high-risk area, your home stands a 26 percent chance of flood damage over the course of a 30-year mortgage.      Roughly one quarter of all claims paid out by the National Flood Insurance Program (NFIP)are from homes located in low-to-moderate risk areas.       All 50 states are subject to floods and flash floods. Flash floods combine the destructive powers of water with frightening and unpredictable speed and often bring 10 to 20 foot walls of water rushing down on unsuspecting areas.       If you are unsure what your flood risk is, go to the NFIP Web site and use the calculator. It can help you determine your need for coverage based on the likelihood of natural disasters.       Keep in mind that even homes in low risk areas are vulnerable to flood damage from non-natural sources like faulty plumbing or new development projects where the ground isn't properly graded.       Click here for tips from FEMA to help secure your property. And you can find information about evacuating pets here.

One More Risk     Finally, in addition to the damage water can cause, don't forget that a flooded home can provide ideal conditions for the growth of dangerous mold spores. Damage from mold or mildew resulting from the after-effects of a flood is covered by flood insurance, but each case is evaluated on an individual basis.

New Hampshire and southern Maine were hit with record-breaking rainfall in 2006, resulting in the state's worst floods since the 1930s, closing schools and businesses and making homes inhabitable.

Still, not all water-related disasters can be blamed on nature. A flood doesn't always mean heavy rainfall and overflowing rivers rushing through the streets and into homes. New land development projects sometimes lead to flooding if the construction alters the natural runoff pattern, making it hard for the ground to absorb water. In other words, floods can happen almost anywhere, to anyone.

In spite of the common occurrence, a typical homeowner's policy does not include coverage for flood damage. That's why it's wise to get additional federally backed insurance coverage. In fact, if your mortgage is backed by the federal government, or if your home is located in a high-risk zone, you are probably required to have flood insurance.

Certainly, anyone whose home includes plumbing is vulnerable to water damage and should consider flood insurance. In fact, the Federal Emergency Management Agency (FEMA) warns that everyone can suffer losses from floods.

The need for flood insurance is even more real for homeowners who live in flood plains without failsafe controls, such as dams. Many people mistakenly believe they will be covered by federal aid in the event of a flood caused by nature. That's only true if the area is declared a federal disaster area by the President, which is a condition that occurs in less than 10 percent of all weather emergencies. The good news is, a presidential declaration is not required in order for a flood policy to pay off - making coverage invaluable.

Even if you do receive federal money to repair damage to your home, you should know these funds are generally a loan, not a grant, and have to be paid back with interest.

Here's an example of the difference insurance can make: A $50,000 FEMA loan at four percent for 30 years will result in a payment of around $240 per month, or $2,880 per year. On the other hand, a flood insurance policy that provides $100,000 in protection may cost you only $33 per month, or roughly $400 per year. The bottom line is, if you want to be sure you can recover financially after a flood, you need to provide your own protection.

Like any policy, you can purchase various levels of coverage. But a standard flood policy includes: structural damage; furnace, water heater, and air conditioner; flood debris clean up; and flooring, such as tile and carpeting. You can also step-up a policy to cover the contents of your home, such as furniture, jewelry, and clothing.

Where Can You Buy Coverage?

Not all homes qualify for coverage. For instance, flood insurance for beachfront or ocean-side property may not be available for the obvious reasons.

FEMA reports that more than 19,000 communities have agreed to tighter zoning and building measures to control floods. That means residents of these communities can buy coverage from the National Flood Insurance Program (NFIP), which currently protects the interests of 4.4 million flood policyholders nationwide.

More than 200 private-sector insurance companies write and service flood insurance policies, under the umbrella of the NFIP, which is backed by the federal government and overseen by FEMA. The funds to support these policies are not taxpayer dollars, but paid for by the premiums collected from flood insurance customers. Check the NFIP Web site to learn whether your community is a participant.

How Expensive is Flood Insurance?

Premiums for flood insurance vary widely, depending on individual risk. In determining price, flood insurance underwriters consider several factors including the property's elevation, proximity to bodies of water, and whether the dwelling has a basement. The average flood insurance policy premium costs around $500 per year, according to FEMA, with deductibles ranging from $500 to $5,000. For homes in a low-to-moderate risk area, an annual premium may be as low as $112.

Cities may participate in a Community Rating System in order to secure discounted flood insurance rates for residents. This involves a voluntary program that encourages floodplain management activities that reduce the likelihood of losses, increase awareness of flood insurance, and facilitate accurate rating of the area. Ask your agent if your community is a Community Rating System participant. Here is a list of other questions to ask:

Questions to Ask Your Flood Insurance Agent (Source: FloodSmart.gov)	Answer
Does my community participate in the National Flood Insurance Program?
Which flood zone do I live in?
Does my community participate in a Community Rating System?
If so, what is my community's CRS rating and do I qualify for a CRS rating discount?
What exactly will be covered in case of flood damage?
How much will it cost to purchase coverage for my building and contents and how do I determine which level to choose, appropriate to my risk?
How will my premium cost change if I choose a higher or lower deductible?
Are there any hidden expenses I should be aware of?