Flood Insurance... Or Lack Thereof
It was back in 2005 when the last hurricane hit land in Florida - lucky us! And with Erika and Joaquin sneaking by just as hurricane season began to wind down this year, we all breathed yet another sigh of relief. Maybe this lull in hurricanes is one reason why tons of people are moving to the coast these days.
A hurricane isn’t the only disaster that threatens floods here in Florida. Heavy rains, mud slides, new developments, flash floods, tropical storms, and high tides can also cause flooding and water damage. Plus, due to climate change and increased coastal urbanization, flood damage is expected to double every decade for the rest of the century (National Academy of Sciences). As it stands right now, there is a 26% chance that at-risk properties will experience a flood loss during their 30 year mortgage, with an average cost of more than $35,000 - while less than 7% of homes and half of high-risk properties are insured against floods (National Flood Insurance Program, NFIP). Whether you are a new homeowner in Florida, or were born and raised here, it’s important to know the ins and outs of flood insurance before making the decision to either take it or leave it. Get the information you need now - don’t wait until it’s too late!
Doesn’t my homeowners insurance cover flooding? Contrary to popular belief, homeowner’s insurance is not your one stop shop for full coverage. Katie Shelly, a Personal Lines Agent at Brown & Brown Insurance tells us, “There’s a false impression out there that a homeowner’s insurance policy covers flooding, when it does not. It’s always a separate policy that we highly recommend due to the high number of flood claims that occur in non-flood zones.” There are two types of insurance policies related to water entering your home - a flood insurance policy and a commercial property or homeowners insurance policy. Each of these policies have different coverage and one thing you should consider is the difference between flood damage and water damage.
Do I have flood damage or water damage? Flood damage is a result of water overflowing onto dry land. If the water touches the ground before coming into your home - ie overflowing rivers, heavy rains, flash flooding, mudslides, sewer main breaks, collapsed swimming pool, and overflow of inland or tidal waters - you have flood damage. Water damage is a result of water coming from within your home - ie busted appliances, broken or burst pipes and hoses, and even rain soaking through the roof. Most commercial property or homeowners policy will cover water damage and not flood damage. You need flood insurance to cover flood damage. Keep in mind, different policies cover different types of damage, so check the details on your existing insurance and before obtaining new insurance.
Does flood insurance cover everything? No. For example, federal flood insurance policies max out at $250,000 when it comes to the physical structure of your home and $100,000 in terms of your personal possessions (their current value) - so if you experience a total loss on a $400,000 home due to a flood, you will only recoup $250,000. Federal insurance policies also do not cover anything found in the basement or your living expenses if you have to relocate. Speak to your insurance agent today to find out the exact details of your policy - then make a decision about whether you think it’s the right one for you.
Do I have to have flood insurance? Yes and no. According to FEMA, under federal law, the purchase of flood insurance is mandatory for all federal or federally related financial assistance for the acquisition and/or construction of buildings in high-risk flood areas (Special Flood Hazard Areas or SFHAs) - so if you live in a floodplain and have a mortgage company, they will require you to have flood insurance. Some lenders require flood insurance even if it isn’t federally required. If you are a renter, you will want to look into obtaining flood insurance to cover the cost of your belongings.
For those of you living in low-risk flood areas - don’t count yourselves out quite yet. According to the National Flood Insurance Program (NFIP), people outside of high-risk flood areas account for about 25% of all NFIP flood claims and receive ⅓ of Federal Disaster Assistance for flooding. Flood insurance is still important to have in these areas since flooding is still possible - plus insurance is less expensive to obtain in low-risk areas!
How much will flood insurance run me? The cost of your flood insurance depends on whether you live in a high-risk or low-risk flood area. According to the NFIP, the average flood insurance policy premium was about $700 per year and from 2010-2014, the average flood claim was $42,000. Katie Shelly tells us, “A flood policy at Brown & Brown Insurance outside a flood zone that covers $250,000 of your dwelling and $100,000 in contents will run you $430 per year. If you live in a flood zone, the prices will vary depending on a flood elevation survey”. Call your insurance agent today to obtain a quote.
What about Federal Disaster Assistance? Won’t they help me? Some don’t think they need flood insurance because Federal Disaster Assistance will cover them. False. Before Federal Disaster Assistance can even be offered, the President has to first declare a major disaster. If a major disaster is declared and you do receive help, the most common form of Federal Disaster Assistance is a loan - which of course must be paid back with interest. Another important fact to know if that you will only qualify for federal home repair assistance if your home sustained minor damage that can be easily repaired. You will not qualify if your home has significant damage or is completely destroyed. In the end, we think flood insurance is the better choice.
I live in a flood zone - how can I protect my home? Having sufficient flood insurance and homeowners insurance is essential in order to get you back on your feet after a loss due to water damage or flood damage. If you live in a high-risk flood area, here are some ways you can help protect your home from water.
Keep your gutters, drains, and downspouts cleared
Elevate your home using piers or columns so your lowest floor is above flood levels or move it to higher ground
“Wet-proof” your home - install foundation vents that allow water to flow through your home instead of building up outside
“Dry-proof” your home - seal the exterior walls by applying coatings to keep water out
Construct barriers (levees/floodwalls) to prevent flood waters from entering your home
Raise switches, sockets, circuit breakers, and wiring above flood level
Anchor and raise your fuel tanks, air conditioning units, furnace, water heater above flood level
Install a backflow valve on your sewer system to prevent flooding
FEMA recommends these four ways to protect your property from flooding
If you suspect your home might flood soon, here are some last minute things that can help protect your belongings.
Raise furniture, rugs, and electronics off the floor or move them upstairs
Shut off the electricity at the breaker panel
If possible, lift major appliances onto concrete blocks and out of harm's way
We want to keep our loved ones and homes safe from the dangers of flooding - so when you sit down with your family to create a flood preparedness plan, talk about how flood insurance can help protect you. For a lot of us, our homes and belongings account for the majority of our assets. Speak to your homeowners insurance company today and find out how you can obtain the right flood insurance for your home.
Contact Information: Katie Shelly Private Client Risk Advisor 321-214-2396 407-660-2012(Fax) kshelley@bborlando.com Brown & Brown Insurance 2600 Lake Lucien Drive Ste 330 Maitland, FL 32751
Baxter Restoration Disaster Restoration Company (407)423-5553 carlos@baxterrestoration.com 1106 West Central Blvd Orlando, FL 32805