ONLY flood insurance protects against the risk of flood damage!
Your business or home has a 26 percent chance of being damaged by flood over the course of a 30-year free period, compared to a 9 percent chance of damage or loss due to fire. Floods can happen almost anywhere and at any time, not just near water. Floods are the No. 1 natural disaster in the United States, causing nearly $1.6 million in damage in Alaska and $23.8 billion in the US in the past 10 years. Flood coverage is sold separately from all other types of insurance coverage.
Flood damage protection is available to protect against loss of commercial buildings, residential buildings/homes, and tenants’ personal belongings. Coverage is available up to $250,000 for single-family, multi-family and other residential buildings and up to $100,000 for contents coverage. Non-residential buildings, including small businesses, may purchase coverage of up to $500,000 for the building and $500,000 for the contents. Flood damage coverage is not covered under any other type of policy except a flood insurance policy.
Placed Lender vs. Insurance placed by the owner/buyer
If you are applying for a construction or home loan, the lender may take the initiative to place insurance coverage on you so that you can meet the loan requirements. This is known as “lender-placed” insurance coverage, and can often be more geared toward protecting the lender’s interests than yours. Additionally, coverage placed by the lender could cost you up to three to four times more than if you placed the insurance yourself through an insurance agency/broker. Lenders will notify borrowers if flood insurance is required as a condition of the loan (National Flood Insurance Reform Act of 1994). Additionally, there is no 30-day waiting period for flood insurance purchased in connection with a mortgage loan. Flood insurance is required if the lender is federally regulated and your property is located in a special risk area.
What is a special risk area?
This is a designated area with the highest risk of flooding. Flood insurance rate maps show high-risk areas as Zones A, AE, or V. However, nearly 25 percent of all flood claims come from medium- or low-risk areas that are listed as Zones B, C and X. Anyone can buy flood insurance. whether or not they are in a special risk area. If you already have flood insurance and are selling your business or home, you can assign your current flood insurance policy to the buyer at closing.
How are flood insurance premiums calculated?
Flood insurance premiums are based on the elevation level of the building or home. A “Flood Elevation Certificate” is needed before flood premiums can be determined. This certificate must be completed by a licensed surveyor or professional engineer who is authorized by law to certify elevation data. Flood Elevation Certificates cost between $200.00 and $1000.00 to complete. Completed Flood Elevation certificates must be kept on file with the local Community Planning Department as required by the National Flood Insurance Program (NFIP) Regulation 44 CFR 60.3b1, FEMA Publication 480, and the local flood reduction ordinance for community.
New Construction Information
The participating community will require an owner or builder to obtain a “Floodplain Permit” before construction can begin. This permit is issued by the Office of Community Planning and requires property owners to build above the base flood elevation. Check with your local Community Planning office to determine your flood zone. If your construction site is located in a special risk area, it is advisable to have a licensed surveyor, professional engineer or registered architect come and establish a temporary reference point before construction begins. This will allow the builder to reference the reference point and build above the Base Flood Elevation (BFE). Additionally, it will help you determine how much fill material is needed to raise your structure above the BFE, resulting in lower flood insurance costs. Remember: Building above the BFE results in lower flood insurance premiums; building below the BFE results in higher premiums.
The lowest flood insurance premiums are available to homeowners who build above the base flood elevation and do not have a basement or basement. Buildings that have a basement or basement require flood openings in the foundation. These are openings on all sides of the basement or basement walls that allow floodwaters to flow freely through the space without building up hydrostatic pressure.
How do I get flood insurance?
Applying for flood insurance is easy! Flood insurance is available through some 90 insurance companies in more than 20,300 participating communities across the country.
Your chosen Insurance Agent will require a Flood Elevation Certificate which will have the necessary information to qualify the policy. The premium charged for an accurately rated NFIP policy will be the same regardless of who you buy the policy from. For more information on rates, premiums or maps, please contact your local independent insurance agent.
Flood Elevation Certificates can be turned in to your local city or township office for safekeeping.