A relative this spring told me it rained so hard, their yard flooded half way up towards their house and streets turned into rivers, but they were not worried because they had water coverage on their insurance policy. But what they really had is what most of us carry, which is back up of sewer and water drains like a sump pump failure. What they would have needed had the surface water reached their house and damaged their extensively finished basement, would have been coverage for run off of surface water, also known as Flood coverage.
As a separate policy underwritten by the National Flood Insurance Plan, a flood insurance policy has a 30 day waiting period for coverage to start. They are policies written according to flood maps produced by FEMA and are offered by several insurance companies through a local agent for 21,000 communities throughout the country. Yes, my relative's community is a participant. Premiums for flood policies are set by the Federal Government and do not differ by company. There are two risk groups as determined by a one percent chance of a one hundred year flood reaching a specific property. That equates to a twenty six percent chance of surface flood water reaching that same property over the life of a thirty year mortgage. This is known as the High Risk Group. The second risk group is known as moderate or Low Risk. 20% of flood claims come from the Low Risk group. Properties in the High Risk Group with a federally back mortgage or financing are required to have a Flood insurance policy.
Coverage available includes building and permanently attached equipment to the building such as furnace, air conditioner, water softener, wells, pumps, etc. There are also options for personal property such as curtains, clothes, etc. for an additional premium cost. These would be items stored in a lower level but must be specified and described on your policy. There are also replacement cost (recommend) and actual cash value (includes a value deduction for depreciation) with the former costing more premium. There are also policies and coverages available for renters and businesses.
So what is it going to be for your hard earned prized possessions and property? Safe and sure with an NFIP flood policy? Or let it ride with fickle Mother Nature?
