Flood Insurance: Filling an Important Coverage Gap
September 14, 2017
Why do I need Flood insurance if I don’t live near the water? Water damage is a common and costly homeowner loss, but coverage under the Homeowners policy is limited. Homeowners policies cover water losses that originate inside the home—broken pipes and hoses, for example. However, coverage is excluded for losses that originate outside the home, such as water intrusion from a broken water main or heavy rains. Flood insurance can help fill the coverage gap.
What is Basic Flood insurance? A Basic Flood policy provides coverage with limits of $250,000 for your dwelling and $100,000 for your personal property. Many people purchase Basic Flood with the expectation that these limits will be adequate for any flooding that they may experience. Basic Flood coverage is available through FEMA, a federal insurance program called NFIP. Most of our insurers also offer Basic Flood coverage.
According to FEMA, the average homeowner is five times more likely to experience flood damage than a fire. Many people are unaware of the greater water damage risk and the Homeowners policy exclusions for some water losses.
How much does Basic Flood insurance cost? Basic coverage for homes in a low risk flood zone is typically $300 to $600 annually. If you live in a higher risk zone, premiums increase accordingly. (In that case, you may also have to obtain an elevation certificate, at your expense, in order to evaluate your risk and determine a premium.)
What is Excess Flood insurance? Insurers also offer Excess Flood coverage, with limits over the Basic Flood limits ($250,000 dwelling and $100,000 contents). Excess Flood policy limits can be as high as the dwelling and personal property limits on your Homeowner’s policy.
How much does Excess Flood insurance cost? Premiums are based on your home’s replacement cost limit and your flood zone. While Excess Flood premiums are often reasonable in low risk flood zones, they can be quite costly for homes located in high risk flood zones. You can always request a quotation for Excess Flood before making a decision.
Why buy flood insurance through Parker Smith & Feek? Most of our high net-worth insurers offer Basic and Excess Flood coverage, either as an endorsement to the Homeowners policy or as separate policies. Their coverage complies with FEMA standards and often offers enhanced features or broadened coverage. If you live in a low risk zone, your Account Advisor already has the information needed to obtain a quote. For high risk zones, you may have to provide additional information, including an elevation certificate.
In our role as insurance advisors, we recommend that clients purchase Basic Flood coverage as an important component of a well-rounded insurance program. Your Account Advisor will be happy to answer your questions and obtain quotations for your consideration.
The views and opinions expressed within are those of the author(s) and do not necessarily reflect the official policy or position of Parker, Smith & Feek. While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.
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