Thoughts on Flood Insurance
What protects my home?
Even though the first three months of the year are some of the wettest in Georgia, heavy rains and flooding can occur at any time. A recent example is the September 2009 floods that destroyed 781 homes in metro Atlanta. Almost 1,500 other homes sustained some damage, prompting the president to declare a federal disaster for 17 counties. Even homes located in areas where there is less than one percent chance of a flood were affected.
Flooding causes more than $2 billion of property damage annually in the U.S., and they occur more often than all other natural disasters with the exception of fire. It’s interesting to note that approximately 25 percent of all flood claims are for houses in low to moderate risk communities.
What is a flood?
By definition, a flood includes a temporary condition when two or more properties that are normally dry are inundated by water or mud. This includes overflow of any body of water, and heavy rapid rainfalls (outside waters coming in).
But doesn’t my homeowner insurance cover a flood?
A homeowner policy covers sudden and accidental physical loss, which does not include flooding. Some typical home problems that are covered by a standard home policy include when a water pipe bursts, or an appliance, bathtub or toilet overflows. You will want to verify if your policy covers water which backs up through sewers or drains. Some insurance companies write separate flood policies provided by FEMA through the National Flood Insurance Program (NFIP). Your mortgage company may require that you purchase a certain amount of flood insurance coverage.
How much coverage is available through the NFIP?
The basic NFIP policy offers coverage up to $250,000 for dwelling, and up to $100,000 for your contents. You can buy either or both coverages, and there is a separate deductible for each. You can choose to cover a loss at replacement cost or actual cash value. It’s wise to choose replacement cost, so your things are restored without depreciation.
What exactly is covered by flood insurance?
Your home includes the air conditioner and furnace, built in appliances, electrical and plumbing, and much more. Think of personal property as things that would fall out if you turned the house upside down, for instance clothing, furniture, and the food in your freezer. Cars are not included in a flood policy, but will be covered by a flood if your auto insurance includes comprehensive coverage. It’s important to know that rooms below ground level, crawlspaces and basements have some coverage limitations. Make sure you discuss these details with your agent.
The National Flood Insurance Program (NFIP) is a cooperative undertaking of the insurance industry and FEMA. Today Allstate writes and services about 10 percent of the currently active flood policies that are written by the insurance industry.