Flooding is a major concern for all Florida residents. Historically, 40% of the hurricanes that have struck the east coast have made landfall somewhere in Florida. Since 80% of Florida residents live on or near the coast, hurricanes run the risk of affecting large numbers of Floridians. Additionally, over 5 million Florida residents near lakes, rivers, and wetlands according to the Federal Emergency Management Agency (or FEMA) for the National Flood Insurance Program (or NFIP). But even though the risk of flooding is present, that shouldn’t deter you from owning the home of your dreams. With the right insurance, you can rest easy. Here are five FAQs about insurance for floods:
Does homeowners insurance cover flooding?
No. Although 85% of homeowners have home insurance policies, few of these policies cover damage due to flooding. The reason is that flood policies are governed by the NFIP. The NFIP supports and standardizes flood insurance for flood-prone communities when they take steps to mitigate flood risk. As a result, flood insurance policies are almost always separate from homeowners policies.
What happens if I do not get flood insurance?
If your home is damaged by environmental flooding, regardless of the cause, flood insurance will likely be the only way to be compensated for that damage. Homeowners insurance only covers water damage from unexpected home-related causes, such as broken water pipes. Water damage caused by runoff, overflowing lakes or rivers, or hurricanes is usually only covered by insurance for floods.
Due to the risk associated with flooding, mortgage lenders will usually require you to purchase and maintain a flood insurance policy if you live in a FEMA designated floodplain. Coupled with the fact that most mortgage lenders require that you purchase and maintain homeowners insurance, you may be required by your mortgage lender to buy both types of insurance policies.
What options are available for flood insurance?
If you live in a FEMA-designated floodplain that participates in NFIP, flood insurance must meet federal standards. However, you have a choice of policies:
- NFIP Standard flood policies: These are policies fall within the NFIP and are sold through insurance companies and insurance agents.
- Private standard flood policies: These are private insurance policies that are written by insurance companies to fall within the scope of NFIP under an agreement with FEMA. These are also sold through insurance companies and insurance agents.
- Customized flood policies: These are private insurance policies that are broader in scope than the NFIP. The NFIP sets the standard coverage against flooding. Private insurance companies are allowed to provide coverage that can go above the NFIP standards but they are not allowed to go below the NFIP standards.
- Supplemental flood policies: These are private insurance policies that are written to supplement a standard flood policy. Like customized flood policies, private insurers are allowed to write supplemental policies that go above the NFIP standards.
Conversely, if you do not live in an NFIP-participating community, your options may be more limited since NFIP coverage is not available outside of these areas. However, many insurance companies offer private flood policies for homes outside of floodplains. The benefit to the homeowner is that the lower risk of flooding outside of FEMA-designated floodplains is usually associated with a preferred rate.
What does flood insurance cover?
Flood policies cover damage to a home due to:
- Storm runoff
- Overflowing water bodies
- Ocean surges due to hurricanes, storms, or tsunamis
- Mudslides caused by floods
- Ground collapse or subsidence due to floods
Do I need to buy flood insurance from the same home insurance company?
The short answer is no, many insurance companies participate in NFIP and sell NFIP and private flood policies. An insurance agent can help you shop around to find the policy that best suits your needs. But you may want to use the same insurer for a few reasons:
- In the event that you need to file a claim, having one insurance company can smooth the process.
- Having a single insurer can help in making sure that any claim is fully covered under one or the other policy
- An insurance company issuing a homeowner policy and a flood policy can identify any additional gaps in coverage. For example, some insurance companies require a separate policy or endorsement to cover wind damage due to hurricanes.
Flood insurance can protect your investment in your home and provide the comfort that natural disasters will not turn into financial disasters. When you’re ready to protect your home, rely on the experience of the Key Agency to help.