Flood insurance is defined in a FEMA Summary of Coverage Bulletin as an excess of water on land that is normally dry. A flood is: (1) a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (one of which is yours) from (a.) overflow of inland or tidal waters; (b.) unusual and rapid accumulation or runoff of surface waters from any source; or (c.) mudflow. (2) collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood.
Flood coverage can be purchased for single family homes, investment properties, condominium associations, and individual condominium units. Business owners can also purchase flood insurance for their commercial properties. Flood can also be purchased at very reasonable rates for properties that are not located in flood zones through a Preferred Risk Policy – discussed below.
Know If You Need Flood
If you are applying for a mortgage for a home in an ‘A’, ‘AE’, or ‘V’ zone, your lender will require you to purchase flood insurance as a condition of closing. Your flood insurance rates (“what you will pay”) are typically determined by many factors such as, (1) the amount of coverage on the policy, (2) the age of your home, (3) the elevation of the house (determined by a survey and an elevation certificate using an engineering company), and (4) the Deductibles on the policy.
What is Covered by a Flood Policy
Flood is not a covered loss under your standard homeowners/hazard policy.
To be insured for a flood loss, you will need to purchase a flood policy. A standard flood insurance policy is a single-peril policy (flood) that pays for direct physical damage to your insured property up to the lesser of the replacement cost, or actual cash value of the actual damages or the policy limit of liability.
Physical damage to your building or personal property “directly” caused by a flood. For example, damage caused by a sewer backup are covered if the backup is a direct result of flooding. If the backup is caused by another source, it is not covered.
Below is a FEMA table providing helpful guidance on flood coverage:
Preferred Risk Policies
You do not have to be in a flood zone to secure this valuable coverage! These affordable flood policies are called Preferred Risk Policies (“PRP”), and their rates are substantially lower than those in the standard flood program. Insured have their choice of selecting from 9 coverage options for the Building and Contents, or can select to insure only the contents, if building coverage is not necessary. The tables below outline the coverage options and cost: