Understanding Flood Insurance
When a major storm is on the way, it’s often too late to get a flood insurance policy. In the aftermath, paying for water and property damage comes with a high cost. So, whether you live inland or by the shoreline, it’s always a good idea to be ready with Connecticut flood insurance. What should you know?
- How to Get Insured
Unlike your homeowner’s policy, flood insurance only comes from two sources: The National Flood Insurance Program (NFIP), operated by the Federal Emergency Management Agency (FEMA), and a few private companies. Rather than go directly to the federal government, you can reach out to a local agent like Ion Insurance to purchase a policy.
- Flood Coverage
Unfortunately, many believe a homeowner’s or renter’s policy includes flood damage. However, these policies specifically exclude floods, with your carrier assuming you will purchase separate coverage – especially if you live in a flood-prone area. On the other hand, your standard auto policy’s comprehensive coverage does reimburse you for flood damage.
When you do purchase a separate flood policy, your home is covered on a replacement-cost basis and actual cash value is used for any belongings. Should you want to extend this, certain private insurers can supplement the limits of your government policy with excess flood coverage. In all cases, your policy kicks in after a 30-day period, which means you should purchase coverage well ahead of a storm.
- How Much It Costs
For a standard NFIP policy, premiums start at $112 per year, although costs increase and decrease with flood risks and the amount of coverage (based on costs set by the government). The highest level available is $250,000 for the home and $100,000 for its contents. Those in high-risk coastal areas pay about $7,200 per year, while those in other high-risk areas pay around half as much. If you live in a low-risk area, policies run at an average of $1,798 per year.
- What If You Don’t Have Flood Insurance?
If you don’t have coverage and a hurricane causes water levels to suddenly rise, you may have the option to purchase a loan to cover all damage-related costs. However, understand that these government loans (FEMA disaster aid), are only available to those in a presidentially-declared disaster area as part of federal recovery efforts. While they have no- or low-interest, they must be paid back.
- Who Needs Flood Insurance?
In many cases, those purchasing homes in high-risk areas are expected to get flood insurance when closing on the property. Yet, a few misconceptions exist. One, that high-risk areas are only along the coastline and two, only these regions experience floods.
Inland floods, flash flooding and seasonal storms occur in every region of the U.S. Also, 90 percent of all natural disasters involve some kind of flooding. Roughly 20 percent of all claims involve regions with low to moderate risks and Midwestern states, including Illinois, Iowa, Ohio and Michigan, have some of the country’s highest flooding rates.
Due to these factors, make sure you have flood insurance if:
- You live near a river, beach, levee or dam.
- A road, mall, new homes or large industrial buildings are being constructed nearby.
- Your region is prone to hurricanes or snowstorms.
- You live in an area with at least a one-percent annual chance of flooding.
- You live in a participating NFIP community.
- You’re getting a government mortgage to buy or refinance a home, backed by Fannie Mae or Freddie Mac.
Also realize that not just homeowners need flood insurance. Those who own a condo, live in an apartment building or own a farm or commercial structure should take out risk-appropriate coverage.
- Dealing with Misconceptions
Many decide against coverage for two reasons. One, their property already flooded and they believe they can’t get insurance and two, they believe an NFIP policy excludes the basement.
However, both of these assumptions are false. While private insurers may give you a hard time if your property has already flooded, those in NFIP-participating communities can still get coverage. NFIP policies also encompass basement coverage under the following conditions:
- Your home or commercial building’s basement has a below-ground floor.
- Your policy gets used for clean-up and service expenses, including repairing and replacing elevators, furniture, HVAC systems, utility components, circuit breaker boxes, pumps and solar energy tanks.
- Insurance won’t cover contents of a finished basement and improvements like finished walls, ceilings and floors.
Rather than find yourself without adequate flood coverage after a storm, discuss your options with Ion Insurance today. To begin, give us a call at 203.439.2815.
