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Flood… A word we don’t want to hear.  It’s that time of year again and the snow is melting.  The deep snowfall, and fast rising waters have made this event an annual rite of spring in Minnesota and surrounding states.

Although it may be too late to cover the 2011 Spring flooding, why take a chance when it comes to flooding in the future?  It seems that every year we hear about the floods in every part of the nation.  Along with this news, we also hear the media reporting about the homeowners, or business owners that were not aware they had an option for flood insurance.

Do you have a plan in place to deal with flooding?  Although the national flood insurance plan does have a waiting period, it is available to many areas of the nation.  Even if you have insurance with the NFIP, you may have more questions about how it works.

Who may purchase a flood insurance policy?  NFIP coverage is available to all owners of insurable property (a building and/or its contents) in a community participating in the NFIP. Owners and renters may insure their personal property against flood loss. Builders of buildings in the course of construction, condominium associations, and owners of residential condominium units in participating communities all may purchase flood insurance. Condominium associations may purchase insurance coverage on a residential building, including all units, and its commonly owned contents under the Residential Condominium Building Association Policy (RCBAP).  The unit owner may separately insure personal contents as well as obtain additional building coverage under the Dwelling Form as long as the unit owner’s share of the RCBAP and his/her added coverage do not exceed the statutory limits for a single-family dwelling. The owner of a nonresidential condominium unit may purchase only contents coverage for that unit.

How can property owners or renters find out if they are eligible to purchase flood insurance?  NFIP coverage is available only in participating communities. Almost all of the nation’s communities with serious flooding potential have joined the NFIP. The NFIP provides a listing of participating communities in the Community Status Book. To learn if a community participates in the NFIP, please refer to the link provided at the end of this article or contact a community official or insurance agent.

Is there a waiting period for flood insurance to become effective? There is normally a 30-day waiting period before flood insurance goes into effect. There are two basic exceptions: First, if the initial purchase of flood insurance is in connection with the making, increasing, extending, or renewing of a loan, there is no waiting period. The coverage becomes effective at the time of the loan, provided the application and presentment of premium are made at or prior to loan closing.  Second, if the initial purchase of flood insurance is made during the 13-month period following the revision or update of a Flood Insurance Rate Map for the community, there is a 1-day waiting period. In addition to the two basic exceptions, FEMA has issued a policy decision specifying the following  4 exceptions:

  1. The 30-day waiting period will not apply when there is an existing insurance policy and an additional amount of flood insurance is required in connection with the making, increasing, extending, or renewing of a loan, such as a second mortgage, home equity loan, or refinancing. The increased amount of flood coverage will be effective as of the time of the loan closing, provided the increased amount of coverage is applied for and the presentment of additional premium is made at or prior to the loan closing.
  2. The 30-day waiting period will not apply when an additional amount of insurance is required as a result of a map revision. The increased amount of coverage will be effective at 12:01 a.m. on the first calendar day after the date the increased amount of coverage is applied for, and the presentment of additional premium is made.
  3. The 30-day waiting period will not apply when flood insurance is required as a result of a lender’s determining a loan that does not have flood insurance coverage should be protected by flood insurance. The coverage will be effective upon the completion of an application and the presentment of payment of premium.
  4. The 30-day waiting period will not apply when an additional amount of insurance offered in the renewal bill is being obtained in connection with the renewal of a policy.
If you’d like more information about Flood Insurance or NFIP, please contact the Bates Insurance Group or visit:
http://www.fema.gov/library/viewRecord.do?id=1404

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