Understanding Flood Insurance

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Some people believe that they are not at risk because their homes are located away from beaches and rivers but most locations can be effected by localized flash floods and when large disasters occure along large or even moderately sized waterways damage can extend for dozens of miles.

Flood insurance like earthquake coverage is a single peril insurance to protect your investment from dammage due to flood waters.

To be considered a flood the water must cover two acres of land or effect two homes but it can be a result of many different situations including rainfall, dam or levey breaks, coastal storm surge or blocked drainage.

If your home is located in a potential danger zone then your lender will require that you have flood insurance before they approve your loan. Policy can range from just over $100 to thousands of dollars a year depending on the risk and the property you are protecting.

Residential home owners can get policies protecting up to 250,000 of the homes value and $100,000 worth of the contents. Businesses can protect $500,000 for the building and $500,000 for the contents.

The type of policy that you can get is determined by the potential risk.

Standard Policiesare for people that live in areas that participate in the National Flood Insurance Program. Building and Contents must be insured separately.

The NFIP offers three different types of Standard Flood Insurance Policies.

Dwelling – Insures residential buildings (buildings with 1 to 4 families) and/or contents, residential condominium units, manufactured homes, and renters contents.

General Property – Insures residential buildings of more than four families, as well as commercial buildings (schools, churches, businesses, etc.).

Residential Condominium Building Association Policy (RCBAP) – Insures eligible buildings owned by condominium associations.

Standard Flood Insurance Coverage Limits

Coverage Type Coverage Limit
One to four-family structure $ 250,000
One to four-family home contents $ 100,000
Other residential structures $ 250,000
Other residential contents $ 100,000
Business structure $ 500,000
Business contents $ 500,000
Renter contents $ 100,000
RCBAP $ 250,000 x number of units

To find out if your location participates in the National Flood Insurance Program check this list on Fema’s Website. 

 http://www.fema.gov/fema/csb.shtm

Preferred Risk Policies  are for locations with low or moderate risk and building and contents are usually protected under one plan.

Residential Preferred Risk Policy premiums start as low as $119 per year for building and contents coverage.

Commercial premiums start at $550 per year for combined building and contents coverage, or $145 per year for contents only.

For a list of policy premiums and coverage check this webpage

FloodSmart Policy Costs

To find an agent in your area use this link

Flood Insurance Agent Finder

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